The turn of a new year often coincides with new resolutions and potential new starts. These changes sometimes stick and sometimes don’t. But, there are some changes that are certain for the new year. Those are changes made by the IRS. The IRS makes some changes each year based on inflation. Key changes for 2024 include:
Standard Deduction – A dollar amount, set annually by the IRS, that most taxpayers can deduct from their taxable income to reduce their tax bill. (Investopedia.com)
| 2023 | 2024 | |
| Married | $27,700 | $29,200 |
| Single or Married Filing Separately | $13,850 | $14,600 |
401k Contibution Limits
| 2023 | 2024 | |
| Younger than 50 | $22,500 | $23,000 |
| 50 or Older | $30,000 | $30,500 |
Individual Retirement Account (IRA) or Roth IRA Contribution Limits
| 2023 | 2024 | |
| Younger than 50 | $6,500 | $7,000 |
| 50 or Older | $7,500 | $8,000 |
Due to the attractive tax benefits, IRA and Roth IRA contributions are limited based on income. At the following income levels the ability to contribute to these accounts begins to decline and then becomes zero at the top end of the range.
| IRA | 2023 | 2024 |
| Married (covered by plan at employer) | $116,000-$136,000 | $123,000-$143,000 |
| Married (not covered by plan at employer) | $218,000-$228,000 | $230,000-$240,000 |
| Single or Married Filing Separately | $73,000-$83,000 | $77,000-$87,000 |
| Roth IRA | 2023 | 2024 |
| Married | $218,000-$228,000 | $230,000-$240,000 |
| Single or Married Filing Separately | $138,000-$153,000 | $146,000-$161,000 |
Gifts – Gifts may be given up to a specific dollar amount. Any gifts received by an individual above the following dollar amount are subject to tax. The dollar amount is based on one person to another. For example, a married couple could gift up to $36,000 in 2024 to one person without the gift being taxed.
| 2023 | 2024 | |
| Gift | $17,000 | $18,000 |
Estate – The estate tax limits are very important the next couple of years. The Tax Cuts and Jobs Act of 2017 allowed for higher estate exemption limits for several years, with the benefit “sun-setting” in 2025. In 2025, the amount is likely to be cut in half per the Act of 2017. Above the following levels any estate will likely be exposed to a 40% estate tax. This drop will expose significantly more families to large taxes. Estate planning becomes very important to avoid these costly taxes.
| 2023 | 2024 | 2025 (estimated) | |
| Estate Exemption Level Per Person | $12,920,000 | $13,610,000 | $7,000,000 |
Index | Fourth Quarter 2023 | Year To-Date 2023 |
| S&P 500 | 11.6% | 26.2% |
| Dow Jones Industrial Average | 13.1% | 16.0% |
| Russell 2000 | 14.0% | 16.8% |
| MSCI All Country World Index ex-US | 10.1% | 15.7% |
| Vanguard Bond Index Fund | 6.8% | 5.7% |
Performance Source: Bespoke Investments Total Return