Clifford Thomas
If you are getting ready to file your 2024 tax return, the deadline that matters most is April 15, 2025 for most taxpayers. Beyond that date, the biggest thing to know is that the IRS adjusted brackets, deductions and contribution limits for inflation again this year, and those changes affect nearly everyone.
At a Glance
- Federal returns for tax year 2024 are due April 15, 2025, with a six month extension available through Form 4868.
- The standard deduction rose to $14,600 for single filers and $29,200 for married couples filing jointly.
- Seven marginal tax rates remain in place, but the income thresholds for each bracket moved higher to reflect inflation.
- Retirement account limits increased too: $23,000 for 401(k) plans and $7,000 for IRAs, with catch up contributions on top for people 50 and older.
- The estate tax exemption climbed to $13.61 million and the annual gift exclusion is $18,000.
Tax Brackets and What They Mean for Your Bill
The federal government still uses seven marginal rates: 10%, 12%, 22%, 24%, 32%, 35% and 37%. What changed for 2024 is where each bracket starts and ends. A single filer pays 10% on income up to $11,600, then 12% on income between $11,600 and $47,150, climbing through the brackets until the top rate of 37% kicks in above $609,350. Married couples filing jointly see roughly double those thresholds at each step, topping out at 37% above $731,200. Heads of household fall in between, with the top rate applying above $609,350 as well.
Because these thresholds moved up from the prior year, some people will find a bit more of their income taxed at lower rates even if their pay went up, a mechanic sometimes called bracket creep protection.
Standard Deduction Versus Itemizing
Most filers take the standard deduction rather than itemizing, and for 2024 it is $14,600 for single filers and those married filing separately, $21,900 for heads of household, and $29,200 for married couples filing jointly and surviving spouses. These figures reflect the near doubling of the standard deduction that came with the Tax Cuts and Jobs Act of 2017, a provision set to expire after 2025 unless lawmakers act to extend it.
Itemizing only makes sense if your deductible expenses exceed these thresholds. A few rules to keep in mind for 2024:
- State and local tax deductions, covering income, property and real estate taxes combined, are capped at $10,000.
- Mortgage interest is deductible on up to $750,000 of debt, or $1 million if the home was purchased before December 16, 2017.
- Cash charitable donations can be deducted up to 60% of adjusted gross income, though you must actively elect this limit on your return.
- Medical expenses are deductible only to the extent they exceed 7.5% of adjusted gross income.
- Most miscellaneous itemized deductions are no longer allowed, with narrow exceptions for certain unreimbursed employee expenses.
Capital Gains Rates on Investments
Long term capital gains get their own rate structure separate from ordinary income brackets, a split that dates back to the 2017 tax law. For 2024, single filers pay 0% on gains up to $47,025, 15% on gains between $47,025 and $518,900, and 20% above that. Married couples filing jointly pay 0% up to $94,050, 15% up to $583,750, and 20% beyond. Heads of household and those married filing separately have their own thresholds in between.
Credits for Families and Working Taxpayers
The Child Tax Credit remains $2,000 per qualifying child for 2024, with up to $1,700 of that refundable, meaning families can receive it even if they owe little or no tax.
The Earned Income Tax Credit helps lower income workers on a sliding scale based on number of dependents. A single filer or head of household with no children qualifies with income up to $18,591 and can claim up to $632. With three or more children, the income limit rises to $59,899 for single filers ($66,819 for married joint filers), and the maximum credit reaches $7,830.
Retirement Account Contribution Limits
Saving for retirement got a bit more room in 2024. Workers can contribute up to $23,000 to a 401(k), 403(b), most 457 plans, or the federal Thrift Savings Plan, with an extra $7,500 catch up contribution allowed for those 50 and older. SIMPLE retirement accounts carry a $16,000 limit, plus a $3,500 catch up for savers 50 and up.
IRA savers, whether traditional or Roth, can put in up to $7,000 for 2024, with a $1,000 catch up for those over 50. Traditional IRA deductions phase out for people covered by a workplace plan: single filers lose the deduction between $77,000 and $87,000 of income, and married joint filers between $123,000 and $143,000 when the contributing spouse is covered at work. If the contributing spouse isn't covered but the other spouse is, the phase out runs from $230,000 to $240,000. A married person filing separately who is covered by a workplace plan faces a fixed phase out of $0 to $10,000, a figure that doesn't adjust for inflation.
Roth IRA contributions phase out at $146,000 to $161,000 for single filers and heads of household, and $230,000 to $240,000 for married joint filers.
Lower and moderate income savers may also qualify for the Saver's Credit, a direct reduction in taxes owed for contributing to a retirement account. The income ceiling for 2024 is $76,500 for married joint filers, $57,375 for heads of household, and $38,250 for single filers and married separate filers.
Required Withdrawals in Retirement
Required minimum distributions apply to traditional IRAs, SIMPLE IRAs, SEP IRAs and workplace retirement plans. Thanks to the Secure 2.0 Act signed into law in late 2022, the starting age moved to 73 in 2023 and will rise again to 75 starting in 2033. Roth IRAs are the exception: there are no required withdrawals during the original owner's lifetime, so the money can keep growing tax free for as long as you want, or pass to heirs still growing.
The Alternative Minimum Tax and Who It Hits
The alternative minimum tax exists to make sure high earners with lots of deductions still pay some federal income tax. It was created in 1963 after Congress found that 155 wealthy taxpayers had used deductions to avoid paying any federal income tax at all, according to the Tax Foundation. Taxpayers subject to the AMT calculate their bill twice, once under the regular system and once under the AMT rules, then pay whichever amount is higher. The AMT itself is charged at either 26% or 28%, depending on income level.
For 2024, the AMT exemption is $85,700 for single filers, phasing out above $609,350 of income, and $133,300 for married joint filers, phasing out above $1,218,700. Five states, California, Colorado, Connecticut, Iowa and Minnesota, layer their own version of the AMT on top of the federal one.
Health Accounts, Estate Tax and Gift Limits
Flexible spending account contributions for health expenses are capped at $3,200 for 2024. For medical savings accounts tied to self only coverage, the annual deductible must fall between $2,800 and $4,150, with out of pocket costs capped at $5,550. For family coverage, the deductible range is $5,550 to $8,350, with an out of pocket cap of $10,200.
On the estate side, anyone who died in 2024 leaves behind an estate tax exemption of $13.61 million before federal estate tax applies. The annual gift exclusion, the amount you can give any one person without triggering gift tax reporting, is $18,000 for 2024.
Filing Deadlines and Getting Help
Your 2024 return is due April 15, 2025. If you need more time, filing Form 4868 gets you an automatic six month extension, though it extends the time to file, not the time to pay any tax owed. The IRS also frequently extends deadlines for taxpayers in areas hit by major storms or other disasters, so it is worth checking current IRS disaster relief announcements if that applies to you.
Deciding between a paid preparer and tax software often comes down to cost and complexity. Software tends to be the cheaper option, but a business owner, someone who had a major life event, or a filer planning to itemize may benefit more from professional help. Weigh your own comfort with tax rules and your available time against what a preparer charges, since a skilled preparer can sometimes save you more in taxes than their fee costs.
Why These Numbers Keep Shifting Every Year
The IRS updates more than 60 tax provisions annually to account for inflation, though not every provision moves each year. The Lifetime Learning Credit, for example, has stayed the same since 2020. With inflation running higher over the past few years than in most of the prior two decades, these annual adjustments have carried more weight than usual, so it pays to check the current year's figures rather than assume last year's numbers still apply. Keep an eye on the 2025 inflation adjustments as they roll out, since those will shape the return due in April 2026.
Cody Robertson
