As we start 2024, you’re no doubt inundated with information about the various IRS thresholds that are subject to adjustment. Here are a few pointers to keep handy as you inform your clients about changes and also help them tee up their charitable giving plans for the coming year.
Social Security COLA Increases
The Social Security Administration announced a cost-of-living adjustment (COLA) increase of 3.2% that took effect in January.
Connection to charitable giving: Remember that retirees are a unique group when it comes to tools and techniques related to charitable giving—72% of Baby Boomers and 88% of the Silent Generation give to charity every year. When you talk about the Social Security increase, it’s a logical time to bring up charitable giving plans for 2024. Consider beginning a relationship between your client and the Omaha Community Foundation to keep their giving streamlined.
Standard Deduction Increases
The standard deduction increased in 2024 by approximately 5.5% to $14,600 for single tax filers and $29,200 for married couples filing jointly.
Connection to charitable giving: The standard deduction is an important factor in charitable giving. Your clients whose gifts to charity, plus other deductions, total more than the standard deduction are eligible to itemize deductions. It is worth talking with your clients about their 2024 charitable giving plans to evaluate whether a “bunching” strategy could be helpful to maximize a client’s intended support of favorite charities over the next few years.
Tax Brackets
Though tax rates in each tax bracket, ranging from 10% to 37%, didn’t change, the income levels that define each bracket did increase. Generally, your clients can earn up to about 5% more in 2024 and remain in their 2023 tax bracket.
Connection to charitable giving: Reviewing tax brackets with your clients is a good time to bring up pending legislation known as the Charitable Act, which would create a “universal deduction” even for taxpayers who do not itemize.
Qualified Charitable Distributions (QCD)
Each taxpayer aged 70½ and older may direct up to $105,000 in distributions from an IRA to a qualified charity in 2024. Note that your clients can make a once-in-a-lifetime QCD to a charitable remainder trust or charitable gift annuity in the amount of $53,000 in 2024.
Connection to charitable giving: With the ability to give more in 2024, your clients can further avoid income tax via QCDs and satisfy a greater portion of their Required Minimum Distributions (RMDs). Field of interest funds and designated funds at a community foundation are very effective recipients of QCDs.
