[Last updated January 10, 2025]
If you’re a retiree, considering retiring, or taking care of someone who is retired, paying close attention to 2024 tax updates could benefit you. When it comes to retirement, every dollar counts, and the 2024 updates could impact your bottom line. This guide will highlight significant tax law changes and explain how they affect you.
Income tax bracket changes
During the 2024 filing season, you won’t see any changes to tax rates, but you will notice that the income thresholds have shifted a bit. You may be in a slightly different tax bracket than the previous year due to the annual adjustment for inflation. Let’s take a look at the 2024 tax bracket breakdown below.
| Tax rate | Single or married filing separately | Married filing jointly | Head of household |
| 10% | $0 to $11,600 | $0 to $23,200 | $0 to $16,550 |
| 12% | $11,600 to $47,150 | $23,200 to $94,300 | $16,550 to $63,100 |
| 22% | $47,150 to $100,525 | $94,300 to $201,050 | $63,100 to $100,500 |
| 24% | $100,525 to $191,950 | $201,050 to $383,900 | $100,500 to $191,950 |
| 32% | $191,950 to $243,725 | $383,900 to $487,450 | $191,950 to $243,700 |
| 35% | $243,725 to $609,350 | $487,450 to $731,200 | $243,700 to $609,350 |
| 37% | $609,350 or more | $731,200 or more | $609,350 or more |
Larger standard deductions
In addition to the adjustments to the tax brackets, this tax season, you’ll also see another tax law change in an increase to the standard deduction. The increase means that less of your money will be exposed to taxes. Let’s take a look at the changes you will see:
| Filing status | Standard deduction | Extra standard deduction for those over 65 |
| Single | $14,600 | +$1,950 |
| Head of household | $21,900 | +$1,950 |
| Married filing jointly (one spouse over 65) | $29,200 | +$1,550 |
| Married filing jointly (both spouses over 65) | $29,200 | +$3,100 ($1,550 ✕ 2) |
| Qualifying surviving spouse | $29,200 | +$1,550 |
| Married filing separately | $14,600 | +$1,550 |
Retirement savings changes
If you’re over 50, still working, and able to contribute to your retirement savings, for the 2024 tax year, you can put away more money than ever. The IRS increased the maximum contribution amounts and also allows for an annual catch-up contribution for people 50 and over. This year, you can catch up on your contributions and put away an additional $7,500 for 401(k), 403(b), and most 457 plans and an extra $1,000 for most IRAs ($3,500 for SIMPLE IRAs). Let’s see how this breaks down, plan by plan:
| Plan type | Maximum contribution + catch-up |
| 401(k), 401(b), most 457s, and Thrift Savings Plans | $23,000 + $7,500 = $30,500 |
| Traditional and Roth IRAs | $7,000 + $1,000 = $8,000 |
| SIMPLE IRAs | $16,000 + $3,500 = $19,500 |
Surviving spouse election to be treated as employee for retirement plans
This tax year, if you are a surviving spouse who is the designated beneficiary of a qualified retirement plan or IRA, you have some new options under required minimum distribution (RMD) rules. Now, you can elect to be treated as the original account owner (the employee) rather than just inheriting the plan or taking a spousal rollover. If you are thinking of using this strategy, there may be some benefits:
- As the employee/account owner, you won’t have to take an RMD until you reach the age of distribution (currently 73).
- You may be able to take a lower RMD because you can use your life expectancy to calculate the distribution rather than your spouse’s. This may be a good strategy for account owners aiming to keep their income lower.
Long-term care insurance (LTCi) premium deductions
The tax-deductible limits for long-term care insurance (LTCi) premiums have also been adjusted. This tax year, there is a decrease in the deductible portion of long-term care insurance premiums. Let’s take a look at these limits below:
| Age | Limit |
| 51 to 60 | $1,760 |
| 61 to 70 | $4,710 |
| 71 and up | $5,880 |
Estate and gift tax changes
The federal estate tax exemption limit has risen to $13,610,000, up from $12,920,000 in the previous tax year, and the annual gift exclusion limit has increased to $18,000 per person. These increases mean individuals can give away more without incurring taxes, benefiting older adults looking to pass on wealth.
Change in 1099-K reporting threshold for digital payment users
If you use third-party platforms like Venmo or PayPal to receive payment for goods or services, you may receive Form 1099-K in the mail this tax season. This is because the IRS has lowered the threshold from $20,000 in payments and over 200 transactions to $5,000.
The bottom line
The tax season is upon us, and keeping up with tax law changes can be overwhelming. Though numerous, these modifications for the tax year 2024 can be pivotal in shaping financial strategies for older adults and caregivers. While this guide offers a synopsis, it’s paramount to consult with a tax expert to use the nuances of these changes to your best advantage.
