Taxpayers preparing their federal returns for 2024 will be able to reduce what they owe by taking advantage of some significant credits, deductions and other tax breaks. Here are some of the most popular tax breaks you can potentially use on your 2024 return.A financial advisor can help you optimize a tax strategy for your investment needs and goals.
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Popular Deductions
The most popular tax deduction is the standard deduction. It’s available for filers who don’t itemize deductions and, for most filers, taking the standard deduction reduces taxable income more than itemizing would.
Each year, the IRS adjusts the size of the standard deduction for inflation. The exact amount is determined by filing status. For tax year 2024, the standard deduction for single filers and married people filing separately is $14,600 ($13,850 in 2023). Married taxpayers filing jointly can deduct $29,200 ($27,700 in 2023). Heads of household get a $21,900 standard deduction ($20,800 in 2023).
Deductions for Filers Who Itemize
For most taxpayers, taking the standard deduction saves more than itemizing. However, some taxpayers still itemize. For those filers, mortgage interest, medical expenses and state and local taxes provide some of the best breaks.
If you took out a home loan after Dec. 15, 2017, you can deduct mortgage interest paid during 2024 on up to $750,000 of the loan. A married person filing separately can only deduct interest on the first $375,000 of the loan. If your mortgage is from before Dec. 15, 2017, the limit is $1 million, or $500,000 for married filing separately. These limitations will return in 2025 when provisions of the Tax Cuts and Jobs Act expire.
You may also be able to deduct outlays for medical care, including money spent on doctor visits, prescriptions, x-rays, eyeglasses and other health needs. You can only deduct amounts in excess of 7.5% of your adjusted gross income, however.
State and local tax deductions can be a boon for residents of high-tax states. Filers can deduct up to $10,000 for payments made for property and either income or sales taxes.
Other Tax Breaks for Your 2024 Return
Each year the IRS adjusts tax brackets to account for inflation. The marginal rates charged for the seven brackets, ranging from 10% to 37%, are unchanged. But the income levels required to move into a higher bracket increase. This amounts to a break for people whose income would otherwise move them into a higher tax bracket.
2024 Federal Tax Brackets
| Rate | Single | Married Filing Jointly | Married Filing Separately | Head of Household |
|---|---|---|---|---|
| 10% | $0 – $11,600 | $0 – $23,200 | $0 – $11,600 | $0 – $16,550 |
| 12% | $11,600 – $47,150 | $23,200 – $94,300 | $11,600 – $47,150 | $16,550 – $63,100 |
| 22% | $47,150 – $100,525 | $94,300 – $201,050 | $47,150 – $100,525 | $63,100 – $100,500 |
| 24% | $100,525 – $191,950 | $201,050 – $383,900 | $100,525 – $191,950 | $100,500 – $191,950 |
| 32% | $191,950 – $243,725 | $383,900 – $487,450 | $191,950 – $243,725 | $191,950 – $243,700 |
| 35% | $243,725 – $609,350 | $487,450 – $731,200 | $231,251 – $365,600 | $243,700 – $609,350 |
| 37% | $609,350+ | $731,200+ | $365,600+ | $609,350+ |
Taxpayers with children or other dependents under age 17 can likely get the child tax credit. This credit was temporarily expanded up to $3,600 in 2021, but it has since reverted to $2,000. The credit reduces your tax bill directly by up to $1,400 per dependent, based on your income.
Other tax breaks include the earned income tax credit, which can be worth up to $7,830 (up from $7,430 in 2023) depending on filing status, number of children and earned income.
Other tax breaks that were increased during the year to account for inflation include higher income levels for phasing out IRA contributions and higher thresholds for capital gains taxes. The size of an estate that is exempt from federal estate and gift taxes rose from $12.92 million in 2023 to $13.61 in 2024.
Bottom Line
As tax season approaches each year, it’s important to keep various tax breaks in mind to ensure you limit your tax liability as best as possible. In 2024, popular tax breaks like the standard deduction and earned income tax credit increased, while other tax breaks remained static. The marginal tax rates remain the same, although the tax brackets were adjusted for inflation, as they are every year.
Tax Planning Tips for Beginners
- To make sure you don’t pay more taxes than necessary, consider hiring a financial advisor who specializes in taxes.Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- Taxpayers who don’t itemize may still be able to take some deductions using the Schedule 1 form. These include self-employment taxes, contributions to IRAs and health savings accounts, interest on student loans, expenses incurred by teachers and alimony.
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