New Tax Laws USA: Tax law changes you need to know for 2024

In 2024, the tax landscape in the United States is undergoing significant changes, influenced by a combination of inflation adjustments and legislative updates. These changes are set to impact various aspects of taxation, from federal tax brackets to state-specific regulations. This article provides a detailed overview of the key changes in tax laws for 2024, offering valuable insights for individuals and businesses alike.

Federal Tax Changes

  1. Inflation Adjustments to Tax Brackets and Rates: Due to inflation, the IRS has adjusted the income thresholds for each tax bracket by approximately 7.1%, affecting the amount of income subject to different tax rates​​. The marginal rates remain the same – 10%, 12%, 22%, 24%, 32%, 35%, and 37% – but the brackets have been adjusted to prevent “bracket creep,” a scenario where taxpayers are pushed into a higher tax bracket due to inflation-induced income increases​​.
  2. Standard Deduction Increase: For 2024, the standard deduction is rising significantly:
    • $14,600 for single filers and married individuals filing separately
    • $29,200 for married couples filing jointly
    • $21,900 for heads of households​​.
  3. Retirement Contribution Limits: The IRS has raised the contribution limits for various retirement accounts to encourage more robust retirement savings:
    • $23,000 for 401(k), 403(b), most 457 plans, and the federal Thrift Savings Plan
    • $7,000 for IRAs​​.
  4. Modified Tax Credits and Deductions: The Earned Income Tax Credit (EITC) and Child Tax Credit (CTC) have undergone modifications, impacting eligibility and the maximum credit amounts​​.
  5. Alternative Minimum Tax (AMT) Adjustments: The AMT exemption amounts for 2024 are set at $85,700 for singles and $133,300 for married couples filing jointly. The AMT rates remain at 26% and 28%​​.
  6. Capital Gains Tax Rates: Adjustments to capital gains tax rates will affect investors and individuals selling assets for a profit. The long-term capital gains rate now varies between 0%, 15%, or 20%, depending on the taxpayer’s income​​.

Changes in Specific Tax Credits and Benefits

  1. Inflation Reduction Act: This act introduces new tax provisions, extensions, and expansions of tax benefits related to energy efficiency, healthcare, and corporate tax​​.
    • Solar energy credit increased to 30% for residential energy-efficient property purchases.
    • Energy-efficient home improvement credit amount increased, with a maximum claim of up to $1,200 for certain improvements and $2,000 per year for qualified heat pumps, biomass stoves, or biomass boilers.
  2. Electric Vehicle Tax Credits: Changes in tax credits for electric vehicle purchases, including up to $7,500 for new electric vehicles and up to $4,000 for used electric vehicles, subject to certain conditions​​.
  3. Student Loan Payments: Resumption of student loan interest and payments, with the ability to deduct student loan interest up to $2,500 on taxes​​.

State-Specific Tax Changes

Several states are introducing specific tax changes effective from January 1, 2024. Some notable examples include:

  • Alabama: Exclusion of overtime wages from gross income for full-time employees, with this exclusion set to expire on June 30, 2025​​.
  • Arkansas: Reduction of the top marginal corporate and individual income tax rates, and adjustments to unemployment insurance tax rate and wage base​​.
  • California: Lifting the wage ceiling for the state’s disability insurance program payroll tax, subjecting all wage income to the payroll tax​​.
  • Colorado: Increase in the state’s earned income tax credit (EITC) from 25% to 50% of the federal credit​​.


The tax changes for 2024 are diverse and substantial, reflecting adjustments for inflation and evolving policy priorities. Taxpayers, both individuals and businesses, must stay informed about these changes to navigate their tax responsibilities effectively and take advantage of any benefits or credits for which they may be eligible. With careful planning and understanding of these new regulations, taxpayers can optimize their financial strategies for the coming year.