As of 2024, several significant changes and updates have been made to the U.S. taxation rules:
- Child Tax Credit: The maximum refundable child tax credit (CTC) has been increased. For 2024, it’s set at $1,900, and it is expected to rise to $2,100 by 2025. The credit is adjusted for inflation, which provides additional relief to families(
).
- Retirement Accounts:
- Roth IRA and Traditional IRA Contributions: The income ceilings for Roth IRA contributions have increased, with phase-outs beginning at $230,000 for joint filers and $146,000 for single filers. For traditional IRAs, the deduction phaseouts start at $123,000 for joint filers covered by workplace retirement plans(
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).
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- Penalty-Free Withdrawals: The SECURE 2.0 Act has introduced provisions allowing penalty-free withdrawals from retirement accounts for emergency expenses, capped at $1,000 annually. Additionally, victims of domestic abuse can withdraw up to $10,000 without incurring the usual 10% tax penalty(
).
- Business Tax Deductions:
- The limitations on business interest deductions have been relaxed, reverting to a 30% limit based on EBITDA (earnings before interest, taxes, depreciation, and amortization), which will be in effect through 2025(
).
- Tax Credits and Deductions:
- The adoption tax credit has been raised to $16,810 for 2024, with phaseouts for higher-income taxpayers.
- The electric vehicle (EV) tax credit of up to $7,500 can now be applied directly at the point of sale, helping buyers reduce their purchase price immediately(
).
These updates reflect ongoing efforts to adjust the tax code for inflation, provide relief to families and businesses, and accommodate new economic challenges.
Here are additional details on the latest taxation rules in the United States for 2024:
- Estate and Gift Tax:
- The lifetime estate and gift tax exemption has been increased to $13.61 million per individual for 2024. This means that individuals can transfer up to this amount during their lifetime or at death without incurring federal estate or gift taxes(
).
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- The annual gift tax exclusion has also risen to $18,000 per recipient. This allows individuals to give away this amount each year to as many people as they like without reducing their lifetime exemption(
).
- Standard Deduction and Tax Brackets:
- The standard deduction has been adjusted for inflation, with the amounts increasing for 2024. For example, the standard deduction for single filers is $14,000, and for married couples filing jointly, it’s $28,000(
).
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- Income tax brackets have also been widened due to inflation, which could reduce the effective tax rate for some taxpayers(
).
- Health Savings Accounts (HSAs):
- HSA contribution limits have reached record highs for 2024, with individuals allowed to contribute up to $4,150, and families up to $8,300. These increases help taxpayers save more pre-tax dollars for healthcare expenses(
).
- Corporate and Business Taxes:
- Companies can now benefit from expanded Section 179 expensing, with the maximum deduction increased to $1.29 million. This allows businesses to immediately deduct the cost of certain types of property rather than depreciating them over time(
).
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- The Tax Relief for American Families and Workers Act of 2024 also includes provisions to restore 100% bonus depreciation for qualifying property purchased after September 27, 2017, and placed in service before January 1, 2027(
).
- Foreign Income Exclusion:
- U.S. taxpayers working abroad can exclude up to $126,500 of foreign-earned income from their taxable income in 2024. This is part of the effort to adjust tax provisions for inflation and maintain fairness for those earning income overseas(
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).
- New Tax Enforcement Measures:
- To offset some of the new tax benefits, the IRS has increased its enforcement efforts, particularly around the Employee Retention Tax Credit (ERTC). Penalties are being introduced for improper claims, and the statute of limitations for assessing these claims has been extended(
).
These updates reflect significant adjustments across personal, business, and international taxation aimed at adapting to inflation, supporting economic recovery, and enhancing enforcement.
