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Tax & AccountingSeptember 13, 2023

Wolters Kluwer projects 2024 federal tax brackets and other amounts

By: CCH AnswerConnect Editorial

This article provides additional insight regarding our recently released Tax Brackets. Download a PDF of the full Tax Brackets below, or sign up for complimentary access to CCH AnswerConnect.

Wolters Kluwer, Inc. has projected federal tax brackets and other inflation-adjusted amounts for the 2024 tax year. Highlights of projected 2024 amounts, including tax brackets for both ordinary income tax and capital gains tax, can be found by completing the form below.

Projected inflation-adjusted amounts for the 2024 tax year

Beginning with the 2018 tax year, most inflation adjustments replaced the Consumer Price Index with the Chained Consumer Price Index, as required by the Tax Cuts and Jobs Act.  The change in the calculation is highly technical, but the end result is much smaller increases in inflation adjustments. Projected increases for the 2024 tax year are smaller than they were in 2023 due to cooling inflation throughout much of 2024. However, since inflation is still higher than it was in the years prior to 2021, the increases in tax brackets, standard deductions, and other amounts are still higher than what would be considered “normal.”

On September 13, 2023, the Bureau of Labor Statistics released Consumer Price Index amounts for August 2023, enabling the calculation of 2024 amounts.

New inflation-adjusted items under Tax Cuts and Jobs Act

In addition to changing the way inflation adjustments are calculated, the Tax Cuts and Jobs Act also produced a number of new items to adjust annually.  These include:

  • Threshold amounts for the Section 199A qualified business income deduction, which for 2024 are projected to be $383,900 for joint filers and $191,950 for single filers
  • Gross income ceiling for corporations and partnerships to use the cash method of accounting, which for 2024 is projected to be $30,000,000

The personal exemption amount for 2023 is projected to be $5,000. While the Tax Cuts and Jobs Act eliminated the personal exemption deduction, the personal exemption amount is still used in a number of instances, such as the qualifying relative test for head of household filing status, and a qualified disability trust’s deduction in lieu of a personal exemption.

Cost of living adjustments for retirement plans

Most amounts related to retirement plans, such as the limitations of contributions to defined benefit or defined contribution plans, are based on a different Consumer Price Index amount that is released in October. One exception is the contribution limitations for Individual Retirement Accounts (IRAs). For 2014, the limitation on deductible contributions to IRAs is projected to increase to $7,000. Under the Secure 2.0 Act, the additional “catch-up” limitation for individuals age 50 and older, historically locked at $1,000, is now subject to annual inflation adjustment beginning in 2024. However, due to rounding, this amount is projected to hold steady at $1,000 for 2024.

Official inflation adjustments for 2024 tax year

The IRS should release official amounts for the 2024 tax year in late October or early November. Tax amounts for the 2023 tax year were released on October 18, 2022 while the retirement plan-related amounts were released on October 24, 2022.

To continue reading, download the full Federal Tax Bracket by completing the form below.

Complete the form to download the full Federal Tax Bracket

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CCH AnswerConnect Editorial

Comprising of industry’s most trusted experts, the Wolters Kluwer CCH AnswerConnect Editorial Staff are knowledgeable and highly qualified to analyze and offer guidance on the latest, important tax topics. They ensure every topic is thoroughly researched and meticulously broken down so you receive the most up to date and accurate information available. Read more of their insights on CCH AnswerConnect.

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