TAX CHANGES FOR 2024 JUST ANNOUNCED BY IRS
One of the few welcome pieces of news coming out about inflation is that the IRS adjusted the 2024 tax brackets and standard deduction by 5.4%. The IRS is trying to stay ahead of inflation by adjusting the tax code. Since a 5.4% increase is slightly ahead of current inflation rates, some taxpayers may see their tax bills marginally decrease.
Let’s take a look at a few of the income tax changes slated for 2024. The standard deduction for singles increases by $750 to $14,600 while the deduction for married couples filing jointly increases by $1,500 to $29,200. The income tax brackets are changing to the following:
- 37% for individual single taxpayers with incomes greater than $609,350 ($731,200 for married couples filing jointly).
- 35% for incomes over $243,725 ($487,450 for married couples filing jointly).
- 32% for incomes over $191,950 ($383,900 for married couples filing jointly).
- 24% for incomes over $100,525 ($201,050 for married couples filing jointly).
- 22% for incomes over $47,150 ($94,300 for married couples filing jointly).
- 12% for incomes over $11,600 ($23,200 for married couples filing jointly).
- 10% for incomes of single individuals with incomes of $11,600 or less ($23,200 for married couples filing jointly).
The estate tax exclusion rises to $13,610,000 in 2024 up from $12,920,000. The annual exclusion for yearly gifts goes from $17,000 to $18,000 in 2024.
Once we have a full list of upcoming changes, we will be sure to post them on our website for your review.
2024 RETIREMENT SAVINGS LIMITS INCREASED
The amount you can save towards retirement is going up in 2024 due to an inflation adjustment. While not as big as last year, it is still a good jump. For those who can contribute to a 401k, 403b, and 457 plan, the amount is going up to $23,000 from $22,500 in 2023. The catch-up provision for those age 50 and over remains at $7,500. If one is eligible for an IRA, the amount increases from $6,500 to $7,000 while the catch-up of $1,000 remains the same. When it comes to funding an IRA, income limits determine how much of the contribution is deductible if you or your spouse also has a workplace retirement plan, and Roth IRA contributions are not allowed for people with income over certain levels. Those contributing to a SIMPLE plan will be able to put in $16,000 up from $15,500 and the catch-up remains the same at $3,500.
INFLATION COOLS IN OCTOBER
It would not be a ProVise Perspective$ without some inflation chatter. The beginning of the Fall season brought some much-appreciated cooling to consumer prices, with the Consumer Price Index (CPI) flat relative to September. That marks only the second time since May 2020 that month-over-month CPI did not move higher. Declines in energy prices and a slowing in housing costs were the main drivers of the better-than-expected results that drove the stock market higher. On the flip side, price increases for food, used cars and trucks, medical care, and transportation services accelerated.
The CPI results likely tempt the Fed to pause its rate hiking campaign for the third straight month in December, but we believe that could be a mistake. History is wrought with inflation head fakes in which a temporary decline gave way to reaccelerating prices that caught the Fed flat-footed. We believe interest rates might have to go higher and remain there for some time to truly win the war on inflation. In the meantime, any reprieve to the historical rise in consumer prices is welcome news.
WHAT IS A TRUST PROTECTOR?
When setting up a living trust, the person who establishes the trust is the grantor and usually the trustee and beneficiary of the trust. One of the grantor’s responsibilities is to name a successor trustee who manages trust assets on behalf of the trust’s beneficiaries if the original grantor is not able.
What happens at death when the trust becomes irrevocable? Another individual or a trust company becomes the trustee. Once the trust becomes irrevocable, it usually cannot be changed without petitioning the courts which can be timely and costly. This becomes very important when the trust exists decades into the future as laws change, unexpected events occur, or new opportunities develop. Enter the concept of the “trust protector.” This individual is given certain powers by the grantor (creator) of the trust to deal with these and other issues.
Here are a few examples of some trust protector’s powers. First, the trust protector monitors the trustee who administers the trust and portfolio management. When a trustee needs to be replaced, the trust protector can make the change. If given the power, the trust protector can also make changes to an irrevocable trust to take advantage of changes in the law that would be beneficial to the trust. The trust protector will review the financial statements, including tax returns, to have another set of eyes on them. Additional responsibilities can also be added if they are within the law. Not all states allow for a trust protector and thus, some still must go to court to make changes. In any event, you should discuss all of this with a legal advisor.
SAVVY WOMEN INVEST ON PURPOSE – BOTH EVENTS HAD GREAT TURNOUTS
Susan Washburn’s two Savvy Women Events on October 24th and November 14th to help empower women to take charge of their financial lives had great turnouts. We will be hosting additional events next year. Please look for more information coming soon.
IN RETIREMENT, WHAT’S MOST IMPORTANT? HAPPINESS OR AFFORDABILITY?
US News and World Report came out with two lists of the “best” places to live in retirement based on different factors and frankly, it is hard to make both lists. When it comes to happiness, the magazine based the ranking on the overall happiness of residents, retiree taxes, housing costs, and proximity to healthcare options. Here are the top 10 (hint – it is good to be from Pennsylvania):
10. Pittsburg, PA
9. Youngstown, OH
8. Daytona Beach, FL
7. York, PA
6. New York City, NY
5. Allentown, PA
4. Scranton, PA
3. Lancaster, PA
2. Reading, PA
1. Harrisburg, PA
IT IS PARTY TIME!!!
Every fall we get a new list of those universities and colleges that are ranked as the best place to “party.” College is mostly about learning, but what the heck, why not have a lot of fun in the process? Niche, an educational website, created the ranking by surveying students and based on the number of bars nearby campus. Here is a list of the top ten:
10. Howard University, Washington, DC
9. University of Illinois Urbana-Champaign, Champaign, IL
8. University of Wisconsin, Madison, WI
7. University of Georgia, Athens, GA
6. University of Southern California, Los Angeles, CA
5. Syracuse University, Syracuse, NY
4. University of Alabama, Tuscaloosa, AL
3. Tulane University, New Orleans, LA
2. Florida State University, Tallahassee, FL
1. University of California-Santa Barbara, Santa Barbara, CA
MORE KUDOS FOR PROVISE
Recently the Tampa Bay Business Journal provided a list of local investment services firms for the Tampa Bay Area. ProVise has been on this list for decades and this year ranked as the 12th largest based on assets under management. Also, Florida Trend magazine searches across Florida for the top 500 influential business leaders. Once again, they recognized our Founder and Executive Chair, Ray Ferrara, for his commitment to helping build the business community. Not only is he involved on numerous corporate boards, but he is a mentor to many business owners.
We hope you continue to stay safe and well.
Proudly and successfully serving our clients for over 38 years. As always, we encourage you to call or email us if you would like to discuss anything.