Important Updates for the 2024 Tax Year & When 1099s Will be Available

A new year means new tax changes.  While Congress didn’t pass any major tax reform last year, some tax provisions have been updated that could affect how much money you keep and how much goes to Uncle Sam. 

Here, we’ve included some of the most significant changes for investors and retirees.  Please note that these changes relate to your filing for the 2024 tax year.  Our suggestion: Look over the material below and circle anything you have questions about.  Then, feel free to share this letter with your tax professional!  They should be able to answer any questions you have.  Of course, our team is also available to help in any way we can.

We understand that tax season can be stressful, so we want to make this process as smooth as possible for you.  Schwab issues Form 1099 Composite in three phases, with most forms available in mid to late February. You can access your tax documents as they become available by logging into Schwab Alliance using your User ID and password.  If you have not opted for paperless delivery, your tax documents will be mailed to you.

To help reduce the stress of tax season, feel free to have your accountant or tax preparer contact us directly for any investment information needed.  We are always happy to coordinate with other professionals you work with to minimize your workload. 

As always, if there’s anything our team can do to be of assistance, please let us know.  Have a great week!

Important Updates for the 2024 Tax Year

Changes to Federal Tax Brackets¹

As it often does, the IRS has adjusted the 2024 tax brackets based on inflation.  These adjustments are smaller than in 2023, as inflation has slowed considerably.  Thus, while tax rates have not changed, bracket ranges increased by about 5.4%.² 

The brackets for the 2024 tax year are as follows:

Tax Rate	Single	Married, filing jointly	Head of Household
10%	0 to $11,600	0 to $23,200	0 to $16,550
12%	$11,601 to $47,150	$23,201 to $94,300	$16,551 to $63,100
22%	$47,151 to $100,525	$94,301 to $201,050	$63,101 to $100,500
24%	$100,526 to $191,950	$201,051 to $383,900	$100,501 to $191,950
32%	$191,951 to $243,725	$383,901 to $487,450	$191,951 to $243,700
35%	$243,726 to $609,350	$487,451 to $731,200	$243,701 to $609,350
37%	$609,350 and up	$731,200 and up	$609,350 and up

Changes to Capital Gains³

The income threshold for long-term capital gains rates has also gone up. 

Tax Rate	Single	Married, filing jointly	Head of Household
0%	0 to $47,025	0 to $94,050	0 to $63,000
15%	$47,026 to $518,900	$94,051 to $583,750	$63,001 to $551,350
20%	$518,900 and up	$583,750 and up	$551,350 and up

Changes to Deductions⁴

As you know, when you file your taxes, you can either claim a standard deduction or dive into the details and itemize your deductions.  (Since the passing of the Tax Cuts and Jobs Act back in 2017, most people choose the former.)  Per the IRS, the standard deduction is “a specific dollar amount that reduces the amount of income on which you’ve been taxed.”⁵

Due to inflation, the IRS has also increased the standard deduction for your 2024 taxes.  For singles, the standard deduction is now $14,600, up from $13,850.  For married couples filing jointly, it is $29,200, up from $27,700.  For heads of households, the standard deduction is $21,900, up from $20,800. Remember, you can’t take the standard deduction if you also itemize deductions.  And for married couples filing separately, both spouses must take the same type of deduction. So, if one spouse chooses to itemize, the other spouse must as well.

Changes to Alternative Minimum Tax (AMT) Exemption Levels⁴

When Congress passed the Tax Cuts and Jobs Act back in 2017, the number of Americans who owe the AMT has been drastically reduced.  But in case you fall under this category, the exemption levels for 2024 are as follows:

Single	Married, filing jointly
0 to $85,700	0 to $133,300

These exemption levels begin to phase out at $609,350 for single individuals and $1,218,700 for married couples filing jointly. 

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We hope you found this information helpful.  Obviously, it’s not a completely exhaustive list of every change for the 2024 tax year.  But it is an overview of some of the most important ones.  If you have any questions or concerns, please let us know.

Sources
¹ “Federal income tax rates and brackets,” Internal Revenue Service, https://www.irs.gov/filing/federal-income-tax-rates-and-brackets
² “Tax brackets for 2024 (for taxes due in 2025),” CNBC, https://www.cnbc.com/select/federal-income-tax-brackets-tax-rates/
³ “Capital gains and losses,” Internal Revenue Service, https://www.irs.gov/taxtopics/tc409
⁴ “IRS provides tax inflation adjustment for tax year 2024,” Internal Revenue Service, https://www.irs.gov/newsroom/irs-provides-tax-inflation-adjustments-for-tax-year-2024
⁵ “Standard Deduction,” Internal Revenue Service, https://www.irs.gov/taxtopics/tc551