5 Changes the IRS Is Making in 2024 That Will Affect Tax Season
Written by
Nicholas Morine
Edited by
Sean Fisher
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As the 2024 tax season approaches, the IRS has announced several significant changes that taxpayers need to be aware of. These adjustments are designed to keep up with inflation and evolving financial landscapes. Here’s a detailed look at five specific changes that will affect how you file and plan for your taxes, based on information from Ramsey Solutions.
1. Standard Deduction Increase
For the 2024 tax season, the IRS has increased the standard deduction to $13,850 for single filers and $27,700 for married couples filing jointly. This increase is designed to help taxpayers keep more of their income tax-free and adjust for inflation, potentially lowering overall tax liability.
2. Adjusted Tax Brackets
The IRS has adjusted the income tax brackets for the 2024 tax season to account for inflation. The new brackets are as follows:
- 10%: $0-$11,000 for single filers; $0-$22,000 for married filing jointly.
- 12%: $11,008-$44,725 for single filers; $22,000-$89,450 for married filing jointly.
- 22%: $44,725-$95,375 for single filers; $89,450-$190,750 for married filing jointly.
- 24%: $95,375-$182,100 for single filers; $190,750-$364,200 for married filing jointly.
- 32%: $182,100-$231,250 for single filers; $364,200-$462,500 for married filing jointly.
- 35%: $231,250-$578,125 for single filers; $462,500-$693,750 for married filing jointly.
- 37%: Over $578,125 for single filers; Over $693,750 for married filing jointly.
These adjustments mean that each income bracket’s thresholds have increased slightly, potentially reducing your overall tax rate and lowering your tax bill.
3. Changes to 1099-K Reporting
The IRS is making changes to the 1099-K reporting requirements, which will affect many freelancers, gig workers, and small business owners who receive payments through third-party networks like PayPal or Venmo. These changes could involve adjustments to the minimum reporting thresholds or the specific information required on the form. Taxpayers who receive these forms should pay close attention to these changes to ensure accurate reporting of their income.
“Following feedback from taxpayers, tax professionals, and payment processors and to reduce taxpayer confusion, the Internal Revenue Service delayed the new $600 Form 1099-K reporting threshold requirement for third party payment organizations for tax year 2023 and is planning a threshold of $5,000 for 2024 to phase in the new law,” per a November 2023 IRS release.
4. Retirement Plan Contribution Adjustments
The IRS often updates retirement plan contribution limits to reflect cost-of-living adjustments. For 2024, taxpayers can expect changes to the contribution limits for Roth IRAs, traditional IRAs, and 401(k) plans. These adjustments are crucial for individuals planning their retirement savings as they can impact how much you can contribute and, consequently, how much you can grow your retirement nest egg tax-deferred or tax-free
5. Roth and 401(k) Plan Changes
In addition to contribution limit changes, the IRS may implement other changes to Roth IRAs and 401(k) plans, such as modifications to income limits for eligibility, withdrawal rules, or loan provisions. These changes can significantly affect retirement planning strategies, especially for those nearing retirement or considering early withdrawals.
Editor's note: This article was produced via automated technology and then fine-tuned and verified for accuracy by a member of GOBankingRates' editorial team.
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