Highlights for the 2024 Tax Year

Standard Deduction Increases The standard deduction is the dollar amount you are allowed to subtract from your income, based on filing status, before your taxable income is calculated. If your eligible deductions exceed the applicable standard, you would benefit from itemizing your deductions. The standard deductions for 2023 are as follows:

Married Filing Joint $27,700,Single ( Married filing Separate) $13,850 Head of Household $20,800

Visit our checklist page for a detailed list of expenses eligible to be used as itemized deductions

The Child Tax Credit: The amount for 2023 is $2,000 per qualifying child under the age of 17 and $500 for dependents aged 17 and over. If you had a dependent child turn age 17 in 2023, you will notice a $1500 decrease in credits on this year's tax return.

Credit for Child Care Expenses: You may claim a credit for up to $3000 for one child and up to $6000 for two or more children. The credit amount ranges from 20% to 35% of eligible expenses, depending upon your adjusted gross income. 

IRA Contribution Limits: The max for age 50 and under is $6500, $7500 for over age 50

Educator Expenses: this deduction for out of pocket expenses incurred by educators has increased to $300

Mileage Rates: The rate for business miles has increased to 65.5 cents per mile. Unfortunately, this deduction remains unavailable as an itemized deduction for W2 employees. The medical mileage rate is 22 cents per mile and the rate for charitable miles is 14 cents per mile.

Energy Efficient Home Improvements Credits: The lifetime limit of $500 has been revoked, the max credit has been increased to $1200 annually. Each improvement has a max credit amount as detailed below:

Exterior doors  Credit is limited to $250 per door and $500 total. 

Exterior windows and skylights that meet Energy Star Most Efficient certification requirements, the credit is limited to $600 total. Insulation and Air Sealing Materials or Systems These items don't have a specific credit limit other than the $1200 maximum

Central air conditioners, Water heaters and Furnace or Boilers (plus installation costs) may qualify for a credit up to $600 per item.  

Electrical components panelboards, circuits and feeders needed to support newly installed AC, furnace etc. also qualify for the credit if they meet certain standards, with a limit of $600 per item.

Heat pumps, Heat pump water heaters, Biomass stoves and boilers (plus installation costs) with a thermal efficiency rating of at least 75% qualify for a max credit of $2000

Solar, wind and geothermal generators, Solar water heaters, fuel cells and battery storage: A credit of 30% of the costs of such improvements is available, with no annual limit.  

Energy efficient improvements must meet specific IRS guidelines in regards to energy efficiency ratings in order to qualify for the credit. If you are a client at Sikon Tax, your tax professional will assist you to determine improvement eligibility. All others may find more detailed information re: specifications by visiting irs.gov