Businesses must stay on top of their decisions throughout the year, as this impacts their tax bills for the following year. This is precisely why it is crucial to stay informed about small business tax changes in 2024. If you wish to remain on the right track and make the best decisions for your business, you will need help from professionals like South Florida Taxes. Additionally, taxation experts will help you strategize according to current tax laws to grow your business, ultimately improving cash flow.

 

Federal Income Tax Changes in 2024

The brackets for Federal Income Tax change in 2024 to incorporate 5% inflation. The revised brackets for 2024 will work favorably for some self-employed individuals.

Let’s understand this better with an example. Consider a small business owner earning about $45,000 per year. In the 2023 tax year, this person would be classified in the 22% federal income tax bracket. The same business with the same earnings in 2024 will fall into the 12% federal income tax bracket (self-employment taxes are additional).

The Federal Income Tax Brackets for 2024 

The IRS changes 2024 tax regime is given below:

Tax Rate	Single Filers	Married but filing separately	Head of household	Married but filing jointly
10%	Income Up to $11,600	Income Up to $11,600	Income Up to $16,550	Income Up to $23,200
12%	Above $11,600 to $47,150	Above $11,600 to $47,150	Above $16,550 to $63,100	Above $23,200 to $94,300
22%	Above $47,150 to $100,525	Above $47,150 to $100,525	Above $63,100 to $100,500	Above $94,300 to $201,050
24%	Above $100,525 to $191,950	Above $100,525 to $191,950	Above $100,500 to $191,950	Above $201,050 to $383,900
32%	Above $191,950 to $243,725	Above $191,950 to $243,725	Above $191,950 to $243,700	Above $383,900 to $487,450
35%	Above $243,725 to $609,350	Above $243,725 to $365,600	Above $243,700 to $609,350	Above $487,450 to $731,200
37%	Above $609,350	Above $365,600	Above $609,350	Above $731,200

Note: Income tax changes for small businesses can vary state-wise. Certain states may need individuals to pay an applicable state income tax.

 

Changes in Standard Deduction in 2024

Business owners and other taxpayers have a choice between itemized and standard deductions on their income.

Standard deductions offered by the Internal Revenue Service (IRS) are commonly opted for by taxpayers since the process is straightforward. These fixed values help taxpayers minimize their taxable income, with the claimed amount depending on their filing status.

The tax changes in 2024 related to standard deductions are as follows:

• For married couples filing jointly, standard deductions have increased by $1,500, bringing the total to $29,200.
• Individual or single taxpayers have seen the standard deduction limit increase from $750 to $14,600.
• A deduction of up to $21,900 can be claimed by the head of the household (unmarried taxpayers with dependents paying more than 50% of the household expenses), denoting an increase of $1,100.

 

Comparing the Standard Deductions of 2023 and 2024 

According to the Internal Revenue Service, here are the standard deduction for 2023  and 2024: 

Filing as	Standard Deductions 2023	Standard Deductions 2024
Single	$13,850	$14,600
Married but filing separately	$13,850	$14,600
Married but filing jointly	$27,700	$29,200
Head of household	$20,800	$21,900

 

Tax Credit and Deduction Amounts: Updates

Small businesses can claim deductions and tax credits for tax bill optimization. You can refer to the business and individual pages on the IRS for credits and deductions in 2024. 

• The Standard Mileage Rate has risen from 65.5 cents (2023) to 67 cents (2024) per mile.
• Certain tax-exempted businesses and organizations can claim up to $40,000 as a tax credit when buying an in-service commercial EV or clean vehicle in 2024. Not every electric vehicle will qualify, though. You will need to assess the specs to ascertain credit eligibility.   
• Eligible taxpayers, including freelancers and self-employed earning between low and moderate income, can use the Earned Income Tax Credit to reduce their tax liability. Qualified individuals can use the credits to reduce their tax liability.

 

2024 Tax Credits and Income Limits 

Number of kids/relatives claimed	Married & Filing Jointly	Single/Widowed/Head of Household
0	$18,591	$25,511
1	$49,084	$56,004
2	$55,768	$62,688
3	$59,899	$66,819

Understanding the nuances of Earned Income Tax Credit is crucial to help you assess your qualifications and eligibility. Consult with tax experts at South Florida Taxes for more information.

Change to Rules Around Capital Gains Taxes

The rules around capital gains taxes have also changed in 2024. This may influence your tax liability for 2024. When you sell a commercial property, capital gains taxes apply. Similarly, these taxes apply during the sale of real estate, bonds, stocks, jewelry, and other capital assets.

In 2024, the following rules apply – 

• Capital gains tax is zero for individual taxpayers whose taxable income is lower than or equal to $47,025. The limit rose from $44,625 in 2023.
• Individual taxpayers with taxable income between $47,026 and $518,900 will be subject to a 15% capital gains tax.
• For a total of $518,900, the tax applicable is 20%.

Navigate Small Business Tax Changes in 2024 with South Florida Taxes

Understanding the intricacies of tax change for small businesses in 2024 is crucial. It will help you make well-informed and favorable decisions for your business. If you need help from professionals, you can speak to us at South Florida Taxes.

.