Important Federal tax changes for 2024:
• Tax brackets have increased by 5.4% due to inflation adjustments. This means taxpayers may fall into lower brackets and keep more of their income.
2024 Tax Brackets and Federal Income Tax Rates | Tax Foundation | |||
Tax Rate | For Single Filers | For Married Individuals Filing Joint Returns | For Heads of Households |
10% | $0 to $11,600 | $0 to $23,200 | $0 to $16,550 |
12% | $11,600 to $47,150 | $23,200 to $94,300 | $16,550 to $63,100 |
22% | $47,150 to $100,525 | $94,300 to $201,050 | $63,100 to $100,500 |
24% | $100,525 to $191,950 | $201,050 to $383,900 | $100,500 to $191,950 |
32% | $191,950 to $243,725 | $383,900 to $487,450 | $191,950 to $243,700 |
35% | $243,725 to $609,350 | $487,450 to $731,200 | $243,700 to $609,350 |
37% | $609,350 or more | $731,200 or more | $609,350 or more |
• Standard deductions have increased:
- Single filers: $14,600 (up from $13,850 in 2023)
- Married filing jointly: $29,200 (up from $27,700)
- Head of household: $21,900 (up from $20,800)
• The maximum Earned Income Tax Credit (EITC) for those with three or more qualifying children has increased to $7,830.
• Contribution limits for tax-advantaged retirement accounts have increased:
- 401(k), 403(b), and most 457 plans: $23,000 (up from $22,500)
- IRA contribution limit: $7,000 (up from $6,500)
• The reporting threshold for Form 1099-K has been lowered to $5,000 in gross payments (down from $20,000). This affects businesses or sole proprietors receiving payments through third-party networks like PayPal or Venmo.
• The Social Security tax wage base has increased to $168,600 (up from $160,200).
• The Alternative Minimum Tax (AMT) exemption amount has increased to $85,700 for singles and $133,300 for married couples filing jointly.
• The annual gift tax exclusion has increased to $18,000 (up from $17,000).
• The foreign earned income exclusion has increased to $126,500 (up from $120,000).
• The maximum adoption credit has increased to $16,810 (up from $15,950).
• First-year bonus depreciation for businesses has decreased from 80% to 60%.
These changes aim to adjust for inflation and may impact your tax situation for the 2024 tax year.
Important tax changes in Nebraska for 2024:
• Personal Income Tax Rate Reduction: The top individual income tax rate will be lowered from 6.64% in 2023 to 5.84% for tax year 2024.
• Tax Bracket Consolidation: The state will begin collapsing its tax brackets from four to three over a four-year period, starting in 2024.
• Remote Worker Tax Changes: Beginning in 2025, Nebraska's "Convenience of the Employer" rule will be amended. Nonresident individuals working for Nebraska companies will only be subject to Nebraska income tax if they are present in the state for more than 7 days during the year.
• Business Asset Deduction: Starting in 2026, taxpayers may receive a Nebraska income tax deduction for 60% of the cost of qualified business assets in the year they are placed in service.
• Family Caregiver Tax Credit: A new nonrefundable tax credit for family caregivers will be introduced, allowing up to 50% of eligible expenses to be credited, with a maximum of $2,000 or $3,000 depending on the family member's status.
• Employer Relocation Credit: A refundable income tax credit for employers who pay relocation expenses for qualifying employees moving to Nebraska will be implemented. The credit is 50% of relocation expenses, up to $5,000 per employee.
• New Resident Income Exclusion: New residents can make a one-time election within 2 years of becoming a Nebraska resident to exclude all Nebraska-sourced wage income if they make between $70,000 and $250,000 per year.
• Property Tax Credit Changes: The state will frontload the 30% property tax credit that goes to schools, making it automatic. However, the property tax credit for 2023 will be eliminated, effectively using those funds to finance the 2024 property tax reduction. Property taxes that go towards Community Colleges are still eligible for the credit in 2024 up to 100%.
• Child Care Tax Credit: Starting in 2024, Nebraska will offer a new refundable child care tax credit for eligible parents or legal guardians with children under the age of 5. The credit amounts are:
- $2,000 per child for households with total income up to $75,000
- $1,000 per child for households with total income between $75,000 and $150,000
- No credit for households with income above $150,000
The child must be enrolled in a licensed childcare program or receive care from an approved license-exempt provider in the childcare subsidy program. The credit is capped at $15 million annually and will be granted on a first-come, first-served basis. Taxpayer MUST submit an application on the NE Dept of Revenue website in order to get approved for the credit. The application portal opens on 1/2/25.
• Nonrefundable Child Care Contribution Tax Credit: Starting in 2024, Nebraska will offer a nonrefundable tax credit for taxpaying individuals and entities (including employers) who make qualifying contributions to promote or enhance child care options. The credit is worth:
- 100% of contributions made to a child care facility in a federally-designated opportunity zone
- 75% of contributions made to a child care facility not in a federally-designated opportunity zone
The credit is capped at $100,000 per taxpayer per year, with a total program cap of $10 million annually. Qualifying contributions can include support for establishing or operating eligible programs, creating grant or loan programs for parents needing financial assistance, funding training and mentorship for child care providers, or improving child care facilities and equipment.
The Reverse Osmosis System Tax Credit Act allows Nebraska taxpayers to apply for a one-time, refundable state income tax credit to offset the cost of installing a reverse osmosis system at their primary residence. Key details of this credit include:
- The credit equals 50% of the cost incurred by the taxpayer for installing the reverse osmosis system during the tax year, up to a maximum credit of $1,000.
- Eligibility is based on test results showing high levels of nitrates, uranium, or certain chemicals in the drinking water.
- To claim the credit, taxpayers must submit a copy of the invoice or sales receipt showing the installation date and labor cost associated with the installation.
This new tax credit aims to help Nebraska residents improve their drinking water quality by making reverse osmosis systems more affordable.
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