It is never too early to start planning for tax season. Several pertinent changes have gone into effect for the 2024 tax year.
Regarding business tax strategy, note that section 179 deduction for depreciation is capped at $1,220,000 with a capital purchase limitation of $3,050,000. Bonus depreciation also decreased to a maximum deduction of 60% of the asset’s purchase price. These changes will be key to keeping in mind when planning capital asset purchases.
On the investment side of the world, the tax brackets for capital gains tax changed slightly. Please see the table below.
Also, in the realm of investing, it is noteworthy to mention the limitations for retirement account investments for 2024. The 401(k) contribution limit increased to $23,000 if you are under age 50 and $30,500 if you are 50 or older. The IRA contribution limit increased to $7,000 if you are under 50 and $8,000 if you are 50 or older. Health Savings Account contributions are limited to $4,150 per individual and $8,300 per family. The required minimum distribution age remains at 73 for 2024.
For those contemplating opening a 529 plan but aren’t sure their kids/grandkids will go to college, the Secure 2.0 Act allows for up to $35,000 (lifetime exclusion) to be converted from a 529 plan to a Roth IRA. This is an excellent option for tax planning purposes, even if they don’t go to college. The money must have been in the account for five years be- fore it can be converted. The annual limit is $7,000 per year for 2024.
Regarding estate planning, the Internal Revenue Service increased the estate exemption to $13.6 million and the gift tax exclusion to $18,000 per recipient. Keep these numbers in mind when gifting to family members, as the estate tax rate can be as high as 40% for 2024.
For individual tax planning, remember that the standard deduction for 2024 increased to $29,200 for those with a filing status of married filing joint, and $14,600 for those with a filing status of single or married filing separately. The head of household standard deduction increased to $21,900. The tax brackets for 2024 can be found in the table below.
As always, our professionals at Equipment Dealer Consulting are happy to help you with your tax planning strategies. Please feel free to reach out with any questions you may have.
AMY BRANDT joined the EDC team in November of 2022 as a certified public accountant to assist in the growing tax preparation demands. She has over six years of experience in tax preparation. Before joining the EDC team, Amy was a partner of a firm for three years that focused on tax preparation for businesses, individuals, trusts and non-profits. Her experience is in a variety of industries from real estate and construction to retail and restaurants. She also has experience in tax planning with various client industries. Amy graduated from the University of Phoenix with her Master of Science in Accountancy in 2018 and obtained her CPA in 2020.
