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Useful Income Tax and Retirement Planning Information
There have been several major tax law changes over the past few years with staggered effective dates. These laws have significantly changed the way you may want to consider your financial situation, especially retirement planning. Here is some information that you find helpful:
Income Tax Rate Schedules for 2024
Single Return Rate Schedule |
Married Filing Jointly Rate Schedule |
||
Taxable income levels |
Tax rate |
Taxable income levels |
Tax rate |
0 to $11,600 |
10% |
0 to $23,200 |
10% |
$11,601 to $47,150 |
12% |
$23,201 to $94,300 |
12% |
$447,151 to $100.525 |
22% |
$94,301 to $201,050 |
22% |
$100,526 to $191,950 |
24% |
$201,051 to $383,900 |
24% |
$191.951 to $243,725 |
32% |
$383,901 to $487,450 |
32% |
$243,725 to $609.350 |
35% |
$487,451 to $731,200 |
35% |
Over $609,350 |
37% |
Over $731,200 |
37% |
2024 Standard Deduction |
Married couples filing a joint return - $29,200 |
Single return filers - $14,600 |
2024 Personal Exemption Amount - $0 – Personal exemptions were eliminated as of 1/1/18 |
2024 Taxation of Dividends and Long Term Capital Gains
Long term capital gains and qualifying dividends receive favorable tax treatment, based on taxable income levels.
Tax rate on long term capital gains and qualifying dividends |
Taxable income levels for those filing individual returns |
Taxable income levels for those filing joint returns |
0% |
Up to $47,025 |
Up to $94,050 |
15% |
$47,025 to $518,900 |
$94,051 to $583,750 |
20% |
Over $518,900 |
Over $583,750 |
2024 Medicare Surtaxes
As part of the health care reform enacted in 2010, additional Medicare surtaxes began in 2013 for high income wage earners and high-income investors. The surtaxes apply when a single taxpayer’s Modified Adjusted Gross Income (MAGI) exceeds a threshold of $200,000 or joint return filers when their MAGI exceed $250,000.
- For wage earners, an additional 0.9% Medicare surtax applies to wages (including bonuses and self-employment income) above the threshold amounts.
- For investors, an additional 3.8% Medicare surtax applies to net investment income (taxable interest, dividends, capital gains, etc.) in excess of the thresholds.
Other Significant Income Tax Changes Effective 1/1/18
- Passthrough income deduction – Individuals can deduct 20% of qualified business income from partnerships, S corporations or a sole proprietorship. This rule can be complicated and you may want to consult your tax advisor.
- Mortgage interest – Interest can be deducted on up to $750,000 of on new acquisition mortgages, down from the old limit of $1 million. Beginning in 2018, no interest on home equity loans can be deducted.
- State and local taxes – Beginning in 2018, the limit on all state and local income, property and sales taxes is $10,000.
Estate Taxes
Year |
Estate Size Where Taxation Starts |
Top estate tax rate |
2023 |
$12,920,000 |
40% |
2024 |
$13,610,000 |
40% |
Regular IRA and Roth IRA Contribution Limits
|
For tax year |
IRA contribution limit |
Additional contribution limits for those age 50 and over |
2024 |
$7,000 |
$1,000 |
401(k) Retirement Plan Contribution Limits
|
For tax year |
401(k) deferral limit |
Additional contribution limits for those age 50 and over |
2024 |
$23,000 |
$7,500 |
Education (or Coverdell) IRAs
For 2024, the annual contribution limit is $2000 with eligibility phase out beginning at $190,000 (for married filing jointly) and $95,000 (for individual filers) of Adjusted Gross Income (some modifications apply).
Annual Gift Tax Exclusion
For 2024, gifts of $18,000 and under are not subject to gift tax.
2024 Payroll Taxes – Social Security and Medicare
2024 Employee wages subject to Social Security tax of 6.2% up to $168,600.
2024 Employee wages subject to Medicare tax of 1.45% on all wages and an additional 0.9% on wages above $200,000 for taxpayers filing single returns. For taxpayers filing joint returns, the additional 0.9% applies to wages above $250,000.
2024 Self-employment income subject to Social Security tax of 12.4% up to $168,600.
2024 Self-employment income subject to Medicare tax of 2.9% on all self-employment income and an additional 0.9% on wages above $200,000 for taxpayers filing single returns. For taxpayers filing joint returns, the additional 0.9% applies to wages above $250,000.
2024 Social Security Benefits
2024 Average monthly benefit for all retired workers - $1.909.
2024 Average monthly benefit for retired couples - $2,972.
2024 Maximum monthly benefit for a worker at full retirement age - $3,822.
