Inflation-adjusted amounts within the Tax Code are projected to experience a 5.4% increase in 2024, according to a recent report by Bloomberg Tax.
This represents a slight reduction compared to the 7.1% surge witnessed this year, nearly double the 3% increase seen in 2022. Bloomberg Tax unveiled this report following the release of the most recent consumer price index by the U.S. Bureau of Labor Statistics, which recorded a 0.6% rise in August, following a 0.2% increase in July.
The report anticipates substantial year-over-year increments in specific deductions. Notable changes include the foreign-earned income exclusion rising from $120,000 to $126,500, and the annual exclusion granting taxpayers the ability to increase their gift-giving from $17,000 to $18,000, without concerns about tax consequences.
The Bloomberg report accounts for tax modifications introduced through the Inflation Reduction Act and the SECURE 2.0 Act. Changes under the Inflation Reduction Act involve an elevation in the Section 4611(c) hazardous substance superfund financing rate, as well as an increase in the Section 179D deduction for energy-efficient commercial building property, subject to meeting new wage and apprenticeship requirements. Changes under the SECURE 2.0 Act include raising the wage limitation amount for the additional Section 45E credit for small employer pension plan startup costs from $100,000 to $140,000.
Heather Rothman, the vice president of analysis and content at Bloomberg Tax & Accounting, commented on the situation, stating, “For the second year in a row, high U.S. inflation has contributed to a significant increase in inflation-adjusted amounts in the tax code. Once again, our annual report provides actionable projections for tax professionals and taxpayers to begin planning for the upcoming year ahead of the official IRS announcement.”
The report presents a range of projections, encompassing penalty amounts for failure to file, figures related to retirement planning, and income thresholds, as well as deduction and exemption amounts.
Inflation drives up tax bracket limits in 2024 | Accounting Today
