On November 9, 2023, the IRS released Revenue Procedure 2023-34, setting forth the inflation-adjusted tax brackets, standard deductions, and other key thresholds for the 2024 tax year.^[1] These annual adjustments affect virtually every individual and business taxpayer, and understanding the new numbers is essential for year-end tax planning and for projecting 2024 tax liability.

2024 Tax Brackets

The federal individual income tax brackets for 2024 are adjusted upward across the board, reflecting the cost-of-living adjustment mandated by statute. For married couples filing jointly, the 10 percent bracket applies to taxable income up to $23,200 (up from $22,000 in 2023). The 12 percent bracket applies to income between $23,200 and $94,300. The 22 percent bracket covers income from $94,300 to $201,050. The 24 percent bracket applies from $201,050 to $383,900. The 32 percent bracket covers $383,900 to $487,450. The 35 percent bracket applies from $487,450 to $731,200. And the top 37 percent rate applies to taxable income above $731,200.^[2]

For single filers, the thresholds are approximately half the married filing jointly amounts: the 37 percent rate kicks in at $609,350. These bracket adjustments are significant because they prevent "bracket creep"—the phenomenon of inflation pushing taxpayers into higher tax brackets even though their real purchasing power has not increased.

Standard Deduction

The standard deduction for 2024 increases to $29,200 for married couples filing jointly (up from $27,700) and $14,600 for single filers (up from $13,850). The additional standard deduction for taxpayers who are blind or age 65 or older remains at $1,550 for married filers and $1,950 for unmarried filers. These increases continue the trend of rising standard deductions that has reduced the number of taxpayers who itemize their deductions—a trend that was accelerated by the Tax Cuts and Jobs Act's near-doubling of the standard deduction beginning in 2018.

Estate and Gift Tax Exemption

Perhaps the most significant number for estate planning purposes is the unified estate and gift tax exemption, which increases to $13.61 million per individual for 2024 (up from $12.92 million in 2023). For married couples who elect portability, the combined exemption can reach approximately $27.22 million. This means that a married couple can transfer up to $27.22 million to their heirs free of federal estate and gift tax.^[3]

However, the current elevated exemption is scheduled to expire at the end of 2025, when the Tax Cuts and Jobs Act provisions sunset. Unless Congress acts, the exemption will revert to approximately $7 million per individual (adjusted for inflation), representing a roughly 50 percent reduction. This impending sunset creates urgency for high-net-worth individuals to make substantial lifetime gifts while the higher exemption is available. Our firm has been advising clients on strategies to take advantage of the current exemption before it is reduced.

Alternative Minimum Tax

The Alternative Minimum Tax exemption for 2024 is $85,700 for single filers and $133,300 for married couples filing jointly. The phase-out thresholds are $609,350 for single filers and $1,218,700 for joint filers. While the TCJA significantly reduced the number of taxpayers subject to the AMT, it remains relevant for certain high-income taxpayers, particularly those with significant state and local tax deductions (which are limited to $10,000 for regular tax purposes but are a permanent add-back for AMT purposes), incentive stock option exercises, or large amounts of tax-exempt interest from private activity bonds.

Other Key Thresholds

Several other inflation-adjusted thresholds deserve mention. The annual gift tax exclusion increases to $18,000 per donee (up from $17,000), allowing individuals to give up to $18,000 to any number of recipients without using any of their lifetime exemption or filing a gift tax return. For married couples, this means $36,000 per donee using gift splitting. The foreign earned income exclusion increases to $126,500. The maximum earned income tax credit for a family with three or more children increases to $7,830.

For business owners, the Section 179 expensing limit for 2024 is $1,220,000, with a phase-out beginning at $3,050,000 in total equipment purchases. The qualified transportation fringe benefit exclusion is $315 per month for both parking and transit benefits.^[4]

Planning Implications

The 2024 inflation adjustments create several planning opportunities. For individuals whose income places them near a bracket threshold, timing income and deductions between 2023 and 2024 can produce tax savings. For high-net-worth individuals, the $13.61 million estate tax exemption—which represents the highest exemption in history—provides a window for tax-free wealth transfer that will narrow significantly if the exemption drops as scheduled in 2026. And for business owners, the increased retirement plan contribution limits (discussed in our prior post) combined with the higher Section 179 limit and bracket adjustments create a favorable environment for year-end tax planning.^[5]