By Steve Dinnen
It’s almost tax time again. Time to start getting your papers in order to pay your state and federal income taxes. Thankfully, not much has changed since last year.
” ‘New’ is pretty limited,” said Joe Kristan, a partner at Eide Bailly. Even so, he pointed out a few topics that are worth noting.
• A big chunk of the 2017 tax law expires after 2025. This is especially important in the area of estate planning.
• A stalemate continues about tax deductions for business costs, including research and development.
• The current political campaigns disagree about several issues, including tariffs.
• A controversy continues about tax credits for employee retention.
• The IRS is beginning to spend its Inflation Reduction Act funding.
• There are workarounds for the cap on state and local tax (SALT) deductions.
About the changes to estate taxes: It’s a very big deal if the current exemption of $14 million drops to $7 million. “You’ll go from easy tax-free to not easy tax-free,” Kristan said.
Now is the time to start exploring tax-limiting tools such as spousal lifetime access trusts (SLATs) or family limited partnerships because — who knows? — waiting even a year could be too late. Estate planning is especially important for wealthy individuals and their families.
Some other points to consider:
• The standard federal deduction for 2024 married people filing jointly rises to $29,200, a bump of $1,500. For seniors over 65, there are bump-ups of $1,950 for singles and $1,550 for married couples.
• Retirement plans, such as 401(k)s and 403(b)s, allow slightly higher set-asides this year. Limits to IRA contributions also rise.
• As for capital gains, none are levied if your taxable income is under $47,025. A 15% rate applies for taxable incomes greater than $518,000, after which a 20% tax applies.
• Brackets have changed. A $46,000 income earned you a 22% rate in 2023. This year, that same income falls into the the 12% rate. By the way, rates start at 10% for incomes greater than $23,200 for married filing jointly and top out at 37% for incomes over $731,200.
For more financial news delivered right to your inbox, sign up for our twice-a-month newsletter on giving, saving, investing and spending money, written by financial expert Steve Dinnen.
