At Strategic Wealth Design, we understand that financial success is rooted in knowledge and strategic planning. We are pleased to re-introduce our Annual “Important Numbers” Guide for 2024—a two-page resource designed to empower you with crucial financial information. In this blog post, we’ll touch on the critical components of the guide. We have also created a 5-minute video to break down these numbers to offer clarity and actionable advice to optimize your financial decisions.



Understanding Tax Rates: A Comprehensive Breakdown

The IRS has increased the tax tables by a 5.4% inflation adjustment, impacting those Married Filing Jointly (MFJ), Single filers, and Estates/Trusts. The US has a progressive tax system, meaning you pay a higher percentage in income taxes the higher your household income. We have seven tax brackets for individuals and four for estates and trusts. It is essential to know your tax bracket, and if you are on the upper or lower end of any of the thresholds, it is critical to meet with your experts for a tax planning session before the year’s end.

Managing Capital Gains Taxes: Smart Investment Strategies

Capital gains tax is due when you sell an investment for more than your cost basis. IRS has three brackets based on your income, and it is vital to review your investments, your gains or losses year-to-date, and the impact on your income tax brackets. In addition, it is important to understand the differences between short-term and long-term capital gains tax and align your investment horizon with your tax strategy.

Please speak with your Financial Advisor about using efficient tax strategies (tax-loss harvesting, etc.) to manage your investment portfolios.

Unlocking the Power of Standard Deductions

With 90% of taxpayers taking the standard deduction, there is no longer a need to stress about itemizing deductions. The standard deduction has also increased by the 5.4% inflation adjustment and now offers a higher deduction for Single and Married filers.

If you are over 65 and married, you will qualify for an additional standard deduction of $1,550 per eligible spouse.

Social Security Realities: No Substantial Increase in Provisional Income

We saw a significant cost-of-living adjustment (COLA) in 2023, but it was lowered to 3.2% for 2024. The wage base for income earners was also adjusted for inflation. However, Social Security’s provisional income thresholds have remained at current levels.

Maximizing Retirement Plans: A Boon for Retirement Savers

As retirement plan limits increase, individuals and business owners can now save more toward their retirement:

  • 401(k) and 403(b) Increased Contributions: Individuals can contribute $23,000 for 2024, with catch-up contributions remaining at $7,500 for individuals over 50. Please adjust your contributions for 2024 if you fund the maximum every year.
  • Profit-Sharing Plans: Business owners can now fund a higher amount for their profit-sharing or SEP IRA plans. The limits have increased to $69,000 per individual.
  • IRA and Roth IRA Contributions: Individuals can now contribute $7,000, increased from $6,500 in 2023. The income phaseouts for Roth IRA contributions and IRA deductibility have also been adjusted for inflation.

Evolving Gift Tax Limits: Planning Your Legacy

The lifetime exemptions and annual gift tax exemptions have increased, providing more opportunities for high-net-worth individuals and families to plan their gifts and estate strategies. Please remember that these limits will be reduced in 2026 once the TCJA tax cuts expire. So, please review your estate strategy with your trusted professionals to see if you should take advantage of these limits now.

Required Minimum Distributions (RMDs): Navigating Withdrawals Strategically

The lifetime tables have remained the same since they were adjusted for 2023. Understanding RMDs for retirees and inherited IRAs is vital for tax-efficient withdrawals.

HSA Limits on the Rise: A January 2024 Checklist

Health Savings Account (HSA) contribution limits have increased for individuals and families. An HSA is the only vehicle offering a triple-tax advantage: A tax deduction on contributions, tax-free growth, and tax-free withdrawals if HSA funds are used for qualified medical expenses. So, consider increasing and maximizing your HSA contributions for 2024.

In conclusion, the 2024 “Important Numbers” Guide is more than a reference—it’s your roadmap to financial empowerment. Utilize these insights, consult your expert advisors, and take proactive steps to shape a prosperous future. Please click here if you would like to book a complimentary consultation to discuss these topics.

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