As we welcome in the New Year, let’s look at the numbers your friendly federal government has prepared for you.
Tax Cuts
Happily, the Tax Cuts and Jobs Act, aka the Trump Tax Cuts, that took effect on January 1, 2018 will last until December 31, 2025. For 2024 and 2025, we will continue to enjoy lowered tax rates, a doubled standard deduction, and a doubled estate and gift tax exemption.
What happens on January 1, 2026? Unless Congress acts, the individual tax rates will jump 1%-4% (depending upon your tax bracket), the standard deduction rate will tumble to half the current rate, and the estate tax and gift tax exemption will drop to about half. Every American will experience a seismic impact on their spending and estate planning, and not in a good way.
In the meantime, we will bask in the sun. The 2024 estate, gift and GST tax exemption is $13,610,000 per person, which is a combined $27,220,000 exemption for married couples. The standard deduction is 29,200 for married filing jointly, and $21,900 for head of household. There is an additional $1,950 if you are single or head of household, not a surviving spouse, and elderly or blind. If you are elderly or blind and married, then the deduction is $1,550 per spouse.
And the lowered tax rates roll merrily along.
The annual gift tax exclusion is a whopping $18,000. That is the amount you can gift without telling the federal government about it.
Social Security
Social security received a 3.2% cost-of-living adjustment. The maximum monthly benefit at full retirement age is $3,822.00.
What is your full social security retirement age? It is age 65 if you were born in 1937 or earlier, age 67 if you were born in 1967 or later, and somewhere between 65 and 67 if you were born in between 1937 and 1960. Check out www.ssa.gov/retire2/retirechart.htm for details. Or pull up your individual information at ssa.gov/myaccount/. If you have not already, you need to set that up.
IRAs
Your government wants you to save money in IRAs, but they don’t make it easy. The traditional IRA deduction phase-out is $77,000 to $87,000 for single or head of household, and $123,000-$143,000 for married filing jointly.
If you think you can get around that by just contributing to Roth IRAs, then you should probably know that there is also a phase-out for Roth IRA contributions. It is $146,000-$161,000 for single or head of household, and $230,000-$240,000 for married filing jointly.
The maximum IRA or Roth IRA contribution limit is $7,000. If you are 50 or over at any time in 2024 you can make a catch-up contribution of $1,000.
Thinking of accepting a foreign gift? You must report it if you receive $100,000 or more from NRA or a foreign estate, and $19,570 or more from a foreign corporation or partnership.
Medicare
Medicare is a hotspot for most seniors, and could they make it any more confusing? The premium for Part A, (which most people do not pay) is $278-505. The monthly premium for Part B is $174.70 and $594. The monthly premium for Part D is $12.90-$81.00.
The benefits part is always fun to figure out. For Part A, the first 60 days you pay a deductive of $1,632. For the next 30 days, you pay $408 per day. For a maximum of an additional 60 days, you pay a deductible of $816 per day, and it counts against your lifetime reserve days.
Happy New Year!
Hammerle Finley Can Help
If you need legal assistance or have questions about any of the information above, Hammerle Finley’s experienced attorneys can help! Schedule a consultation today to discuss your options.
Virginia Hammerle is an accredited estate planner and represents clients in estate planning, probate, guardianship and contested litigation. She may be reached at legaltalktexas@hammerle.com. This column contains general information only and does not constitute legal advice.
