Each year sees changes to the tax code. Those changes usually affect nearly everyone. In 2023, tax changes in the Inflation Reduction Act came into effect, including an increase in per-barrel oil taxes and changes to the standard deduction and Alternative Minimum Tax Rate. Keeping up with the tax changes ensures you file your taxes correctly, whether you are a business or an individual. The Florida tax attorneys at France Law Firm can help you file your taxes and make sure you don’t miss any of the new tax rules.
Taxes for 2023 and 2024
You may not think the upcoming changes for 2024 are important right now since you will be filing for 2023. However, those changes may affect your long-term tax plans, whether for your estate or your business. France Law Firm has an estate planning attorney who is also a business tax attorney who can help ensure your estate plan, business plan, and tax plan all work together to benefit you now.
Taxes for 2024 apply to the tax returns you file in 2025, while taxes for 2023 apply to the tax returns you file in 2024 (current year).
Per-Barrel Oil Tax
The Inflation Reduction Act reinstated the Hazardous Substance Superfund, which adds yet another tax to each barrel of oil. This tax affects anyone who itemizes and claims fuel for their businesses, as the oil companies are going to pass that tax onto businesses and individuals. While the tax is new in 2023, it is retroactive to Dec. 31, 2016.
Standard Deduction
The standard deduction is changing for 2024. In 2023, it is $27,700 for a couple married filing jointly. For 2024 (taxes filed in 2025), you will have an increase of $1,500 for a standard deduction of $29,200. Rates for other filing statuses are:
- Single People and Those Married Filing Separately: $13,850 for 2023 and $14,600 for 2024
- Heads of Households: $20,800 for 2023 and $21,900 for 2024
Marginal Rates
The tax brackets are remaining the same as the 2023 tax brackets. For 2023 and 2024, the top rate is 37 percent for individuals making over $609,350 and for married couples filing jointly making over $731,200. The additional brackets are as follows:
- 35 percent for individuals making over $243,725 and married couples filing jointly making $487,450
- 32 percent for individuals making over $191,950 and married couples filing jointly making over 383,900
- 24 percent for individuals making over $100,525 and married couples filing jointly making over $201,050
- 22 percent for individuals making over $47,150 and married couples filing jointly making over 94,300
- 12 percent for individuals making over $11,600 and married couples filing joint making over $23,200
- 10 percent for individuals making $11,600 or less or married couples filing jointly making $23,200 or less
Alternative Minimum Tax
The Alternative Minimum Tax (AMT) limits deductions. If an individual or married couple itemizing has too many deductions, the AMT kicks in, so you can’t lower your tax responsibility too much. In 2023, the AMT exemption is $81,300 and starts to phase out at $578,150 for individuals and 126,500, phasing out at $1,156,300 for couples filing jointly.
For 2024, the AMT kicks in at $85,700 for individuals and starts to phase out at $1,156,300.
Earned Income Tax Credit
Qualifying taxpayers who have at least three qualifying children can receive an Earned Income Tax Credit (EITC) of $7,830 in 2024 and $7,430 in 2023.
Estate and Gift Taxes
The basic exclusion for estate taxes (commonly known as the Federal Death Tax) for those who died in 2023 is $12,920,00, and in 2024, $13,610,000.
The annual gift tax exclusion is $17,000 for 2023 and $18,000 for 2024.
Contact France Law Firm
These are just a few of the taxes that will affect the average person or couple filing jointly. Several other changes include the limitation for the qualified transportation fringe benefit, employee salary deductions for contributions to health flexible spending accounts, self-only coverage in Medicare Savings Accounts, foreign earned income, and the maximum credit allowed for adoptions.
When it’s time to start your taxes for 2023 and if you need to make changes to your estate plan based on tax changes for this year and next year, contact a tax attorney and estate planning attorney at France Law Firm for a consultation.
