Saving money in 2024!

As your trusted real estate advisor, We are here not only to guide you through the complexities of buying or selling property, but also to keep you informed about financial factors that could impact your home ownership journey and your financial stability. Today, let's dive into the anticipated tax code changes for 2024 and how they might offer you some relief in the coming year.

Understanding the Shift in Tax Brackets

The IRS periodically adjusts federal income tax brackets, and these changes can significantly affect your finances. For instance, if your income remained stable at $45,000 from 2023 to 2024, you might find yourself moving from a 22% tax bracket down to 12%. This means less federal tax and more money in your pocket each paycheck.

However, if your income increases in 2024, the exact impact on your tax bracket will depend on the extent of this increase. While you might still land in a lower bracket due to the new changes, there's also a chance you could stay in the same bracket or even move up to a higher one.

Inflation's Role in Your Financial Planning

It's crucial to remember that while a drop in tax bracket can be beneficial, we are still navigating through an inflationary period. High prices for housing, gas, food, and other essentials might offset some of the financial benefits of a lower tax bracket. Therefore, it's essential to plan accordingly.

If your Gross income is less than the amount shown for the family size listed on the left, you
may qualify for the Home Repair Program (2023 Income Guidelines for HUD Programs).

A Closer Look at the 2024 Income Tax Brackets

Your tax bracket determines how much you owe in federal taxes, not considering deductions like the standard or itemized deductions. Here's a breakdown for different filing statuses:

• Single Filers:

  • $11,600 or less 10% $11,601 - $47,150 $1,160 plus 12% of income over
  • $11,600 $47,151 - $100,525 $5,426 plus 22% of income over $47,150
  • $100,526 - $191,950 $17,168.50 plus 24% of income over $100,525
  • $191,951 - $243,725 $39,110.50 plus 32% of income over $191,950
  • $243,726 - $609,350 $55,678.50 plus 35% of income over $243,725
  • $609,351 or more $183,647.25 plus 37% of income over $609,350
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• Married, Filing Jointly
  • $23,200 or less 10%
  • $23,201 - $94,300 $2,320 plus 12% of income over
  • $94,301 - $201,050 $10,852 plus 22% of income over $94,300
  • $201,051 - $383,900 $34,227 plus 24% of income over $201,050
  • $383,901 - $487,450 $78,221 plus 32% of income over $383,900
  • $487,451 - $731,200 $111,357 plus 35% of income over $487,450
  • $731,201 or more $196,669.50 plus 37% of income over $731,200

The 2024 Standard Deduction

The standard deduction for 2024 has increased, offering more tax relief. For single filers, it's now $14,600, up by $750. For those married and filing jointly, it's raised to $29,200, an increase of $1,500.

Maximizing Your Tax Benefits

Most taxpayers, particularly those with straightforward tax returns, benefit from claiming the standard deduction. If you're a W-2 employee, this is typically the best route for maximizing your refund. However, if you're self-employed or have unique deductions, itemizing may be more advantageous.

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  Additional Tax Changes to Anticipate in 2024

  Besides the bracket adjustments, 2024 brings other changes that might positively impact your finances:

  • A 3.2% cost-of-living adjustment for Social Security recipients. In 2023 COLA (Cost of living adjustments) was 8.7% so a little bit of a decrease.  The maximum amount of earnings subject to the Social Security tax (taxable maximum) will increase to $168,600.
  • Increases in popular tax credits and deductions, including the Earned Income Tax Credit.
  • Adjustments to the gift tax exclusion has increased to $18,000 per person up from $17,000 in 2023.

I'm aware that taxes might not be the most exciting topic for everyone, yet gaining a grasp on them can lead to substantial savings over time. This knowledge is particularly crucial if you're considering buying or selling a property this year, as staying informed can significantly impact your financial strength and set you up to be in a better position when you decide to make that change.