Tax season is here, and if you’re preparing to file your 2024 return, you’ll want to be aware of recent tax law changes that could impact how much you owe or how much you get back in refunds. From adjustments in tax brackets to changes in deductions and credits, here’s a breakdown of key updates to consider when filing this year.

Adjustments to Tax Brackets and Standard Deductions

Each year, the IRS adjusts tax brackets and standard deductions to account for inflation. For 2024:

• The standard deduction has increased to $14,600 for single filers and $29,200 for married couples filing jointly.
• Tax brackets have shifted slightly, meaning your income may be taxed at a different rate than last year. This could result in a lower tax liability for many taxpayers.

Example:

If you earned $50,000 in 2023, a portion of your income may have fallen into a higher tax bracket than in 2024, reducing your tax burden this year.

Expansion of the Child Tax Credit

For 2024, the Child Tax Credit (CTC) has been expanded:

• Eligible families may receive up to $2,100 per qualifying child (up from $2,000 in 2023).
• The credit is now fully refundable, meaning you can receive the full amount even if you owe no taxes.

Example:

A family with two qualifying children could see an additional $200 in tax credits, reducing their tax bill or increasing their refund.

Changes to Retirement Contribution Limits

If you contribute to a 401(k) or IRA, good news—contribution limits have increased:

• The 401(k) contribution limit has risen to $23,000 (up from $22,500 in 2023).
• The IRA contribution limit is now $7,000 (up from $6,500 in 2023).

Making the most of these higher limits can help you reduce taxable income while boosting your retirement savings.

Student Loan Interest Deduction Updates

With federal student loan payments resuming in late 2023, many borrowers are once again eligible to claim the student loan interest deduction, which allows up to $2,500 in interest payments to be deducted from taxable income. However, income phase-out limits have been adjusted, so high earners may no longer qualify.

Example:

If you paid $2,000 in student loan interest in 2024 and qualify for the deduction, your taxable income could be reduced by that amount, lowering your tax bill.

Energy Efficiency Home Improvement Tax Credit

Homeowners making energy-efficient upgrades may qualify for a tax credit of up to $3,200 under the Energy Efficient Home Improvement Credit. This includes:

• 30% credit for energy-efficient windows, doors, and insulation
• A $2,000 credit for heat pumps and biomass stoves

Example:

If you install solar panels or upgrade your HVAC system, you could receive a credit that directly reduces your tax liability.

Final Thoughts

These tax law changes could mean more savings or additional deductions, but they also add complexity to the filing process. To ensure you maximize your benefits and avoid missing out on key credits or deductions, consider consulting with a tax professional.

If you have questions about how these updates impact your specific tax situation, leave a comment below, or feel free to contact me directly. I’m happy to help!