USA Tax Reform

Tax Reforms refers to amendments in Income Tax Policies. Tax Reform aids in enhancing Tax Administration services. Besides, major impact is seen on Tax Jobs & Cuts. It provides benefits on Econonmic & Social fronts.

Tax Changes for 2024 filing year are as follows- 

• Taxability of Income remains the same.

• Updated Tax Brackets.

• Earned Income Tax Credit is higher.

• Increase in Standard deductions.

• More Alternative Minimum Tax (AMT).

 Current Changes in Tax Policy

 Mainly tax changes are made to following:

• Tax Brackets

• Standard Deduction

This year changes in Tax Brackets may help you get tax lower than usual. It is just because of the adjustments made to your taxes by IRS influenced from Inflation made throughout the year. For instance, for Individual with Income higher than $609,350 & Couples with Combined income $731,200 about 35% tax applies. While it is about 35% for Single taxpayers (with Income $243,725) & Couples with income higher than $487,450. Tax rate may drop to 10% for Single taxpayers (income $11,600) & couples(Income < $23,200).

Tax-benefited Retirement plans can boost up your contributions. The Contribution limit is generally lies in the range $22,500 to $23,000 in case the taxpayer files under 401(k) and 403(b) plans. For employees at the age of 50 with income of about $30,500 need to pay taxes upto $7,500.

Using your Filing status details, taxpayers can utilise Standard deductions for lowering taxable income. There is an increase of about $1,500 than last tax year for couples filing together. While standard deduction of $13, 850 applies on the Single taxpayers. It may goes upto $20,800 for head of household.

• Threshold on Tax levied as Capital Gains: The amount levied upon selling capital resources like Books, Jewelry & real estate, refers to Capital Gains. For individuals with Income $47,025 or less capital gains in not levied. The rate has jumped to 15% for income reached $518,900 from $47,026.

• Boost in Deductible amount for health savings account: If individual hlods out-of-pocket expense of $5,500 then the Annual deductible lies in the range of $2,800 to $4,150, then he is eligible for Health savings account. 

• Taxes on Child Earnings: About $1,300 is tax free on unearned income for child under 19. This tax reform is under kiddie tax changes.

• Boost in Gift Exclusion range: This year the threshold value for taxable Gift amount reached upto $18,000 from $17,000. Any gift amount above this range is taxable.