As the new year gets closer, many people anticipate upcoming tax changes. 2024 will bring significant tax changes that business owners should be aware of when navigating business and personal taxes – however, with several changes to taxes underway, it’s easy to get lost and confused.

To help you stay on top of your taxes in 2024 and understand tax law in the following months, we’ve compiled a guide to tax changes to look out for in 2024. From tax brackets to new projects and changes for business owners, read more to find everything there is to know about tax law in 2024!

Tax Rate Bracket Income Ranges

2024 will bring several adjustments to tax rate brackets for filers of different income ranges. According to Bloomberg Tax & Accounting’s 2024 Projected U.S. Tax Rates, inflation-adjusted amounts in the current tax code will increase 5.4% from 2023, slightly down from 7.1% in 2023.

Additionally, the report found the following key adjustments for individual income tax rate brackets:

Married Filing Jointly and Surviving Spouses

The projected 2024 tax rate bracket income ranges for married filing jointly and surviving spouses are expected to be the following:

• 10% – $0 to $23,200
• 12% – Over $23,200 to $94,300
• 22% – Over $94,300 to $201,050
• 24% – Over $201,050 to $383,900
• 32% – Over $383,900 to $487,450
• 35% – Over $487,450 to $731,200
• 37% – Over $731,200

Unmarried Individuals

For unmarried individuals, other than surviving spouses and the head of household, Bloomberg predicts the following as the projected 2024 tax rate bracket income ranges:

• 10% – $0 to $11,600
• 12% – Over $11,600 to $47,150
• 22% – Over $47,150 to $100,525
• 24% – Over $100,525 to $191,950
• 32% – Over $191,950 to $243,725
• 35% – Over $243,725 to $609,350
• 37% – Over $609,350

Standard Deduction

Furthermore, Bloomberg’s report provided information on standard deductions for personal taxes in 2024 based on filing status. For those married and filing jointly or surviving spouses, standard deductions for 2024 will be a projected $29,900. Heads of household are projected to receive standard deductions of $21,900, while all other taxpayers will receive a standard deduction of $14,600.

Personal Exemption Amounts

One area of significant change in 2024 is in personal exemption amounts for taxes. As a result of the Tax Cuts and Jobs Act (TCJA), no personal tax exemption amounts are available in 2024. Previously, taxpayers were allowed to have one exemption for themselves, their spouse, and a personal exemption for each dependant.

Alternative Minimum Tax

Bloomberg’s report also determined the projected 2024 alternative minimum tax (AMT) exemption depending on personal filing status:

• Married filing jointly and surviving spouses: $133,300
• Unmarried individuals other than surviving spouses: $85,700
• Married filing separately: $66,650
• Estates and trusts: $29,900

Capital Gains

Rates for capital gains are not expected to change in 2024 – however, brackets for the capital gain rates will shift. Currently, most taxpayers pay a maximum 15% capital gains rate, while a 20% tax rate is applicable if taxable income exceeds the amount set for the 37% ordinary tax rate. There are additional exceptions for collectibles, art, and section 1250 gain.

According to Bloomberg, the following maximum capital gains rates will apply in 2024 for individual filing statuses:

• Married filing jointly and surviving spouses: $94,050 maximum zero rate amount; $583,750 maximum 15% rate amount
• Married filing separately: $47,025 maximum zero rate amount; $291,850 maximum 15% rate amount
• Individual taxpayers: $47,025 maximum zero rate amount; $518,900 maximum 15% rate amount
• Heads of household: $63,000 maximum zero rate amount; $551,350 maximum 15% rate amount
• Trusts and estates: $3,150 maximum zero rate amount; $15,450 maximum 15% rate amount

Direct File Project

The Internal Revenue Service (IRS) is launching a Direct File project for the 2024 tax season, allowing eligible taxpayers to participate in the pilot to file their 2023 federal tax return for free. Within this program, taxpayers file directly with the IRS through a mobile-friendly and interview-based service rather than filing through other options like commercial software products or a tax professional.

This program will not be available on a wide scale in 2024, with only select taxpayers taking advantage of this system as the IRS tests it to ensure it works effectively for different taxpayers. As Direct File continues developing, more taxpayers can use this system for filing taxes.

Improvements for Small Business Owners

2024 will also see several improvements for small business owners regarding their taxes, such as the following explained by the IRS:

• More online service tools. Before the 2024 filing season, the IRS plans to launch Business Online Accounts for small business taxpayers. This tool will allow small businesses to view tax information, schedule and track payments, and access business tax transcripts.
• Ability to respond to tax notices and file documents online. The IRS has recently opened an online portal allowing businesses to file Form 1099 series information returns online. Additionally, small businesses in 2024 can respond to some notices online. By 2024, small businesses can respond online to correct self-employment income, identify theft notifications, and other online notices.
• Mobile-friendly forms. In 2024, the IRS will provide resources for small business owners to access mobile-friendly and simplified tax forms, including Forms 940, 941, and 944.
• Digitization and fewer paper-based processes. Small business owners will benefit from increased digitization to access and file popular forms online, expediting the filing process and eliminating paper-based operations.

How DVF Can Help

Navigating business taxes can be challenging, especially given upcoming tax changes and alterations in tax law. Dempsey Vantrease & Follis PLLC can help by providing the best of the best in tax services for Tennessee businesses.

Dempsey Vatrease & Follis PLLC offers tax services to businesses and individuals looking to minimize their tax exposure with the help of a trusted tax professional. No matter your tax needs,  we’ve got you covered. Contact Dempsey Vantrease & Follis PLLC today to understand upcoming tax changes and navigate the new tax landscape.