Latest Tax Guidance for the 2024 Filing Season in the U.S. (with focus on California)

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Latest Tax Guidance for the 2024 Filing Season in the U.S.

As the 2024 tax filing season approaches, it’s essential for taxpayers to stay informed about the latest changes in tax law, especially for residents in California. Here are the key updates you need to know to ensure a smooth and accurate filing:

1. Standard Deduction Increase

Federal: The IRS has raised the standard deduction for 2024, which will benefit most taxpayers. The new deduction amounts are:
- $27,700 for single filers (up from $27,000 in 2023)
- $55,400 for married couples filing jointly (up from $54,000 in 2023)
- $41,800 for heads of household (up from $40,800 in 2023)
California: California’s standard deduction has also increased. For 2024, the new amounts are:
- $10,478 for single filers (up from $10,404 in 2023)
- $20,956 for married couples filing jointly (up from $20,808 in 2023)
- $15,716 for heads of household (up from $15,612 in 2023)

2. California’s Middle-Class Tax Refund

As part of the state’s efforts to support residents, many Californians received a Middle-Class Tax Refund (MCTR) in 2023. If you received this payment, you don’t need to pay taxes on it. It was a one-time payment, and it does not need to be reported as income on your 2024 tax return.

3. Changes to the Child Tax Credit

Federal: For 2024, the Child Tax Credit (CTC) will be up to $2,000 per qualifying child under the age of 17. The credit is subject to income phase-outs, which means higher earners may receive a reduced amount or none at all.
California: California offers its own state-level California Child Tax Credit (CTC). For 2024, the credit will continue to be available for lower- to middle-income households. The amount depends on income levels and the number of children claimed, but it is expected to continue being a significant relief for families in the state.

4. California Renters’ Credit

California continues its Renter’s Credit for eligible renters in 2024. To qualify, you must meet certain income requirements and be renting your primary residence. The maximum credit is $60 for single filers and $120 for married couples, but income limits apply. Be sure to check if you qualify and take advantage of this tax break.

5. Taxable IRA and 401(k) Withdrawals

Federal: The IRS has issued updated guidance for those withdrawing from retirement accounts such as IRAs and 401(k)s. For taxpayers who are withdrawing from these accounts, be mindful of the Required Minimum Distribution (RMD) rules. The age at which RMDs must begin has been pushed to 73 starting in 2024 (up from 72).
California: California conforms with federal tax laws when it comes to IRA and 401(k) withdrawals. However, the state does not provide deductions for contributions to retirement accounts like some other states do, so be sure to account for this when filing.

6. California State Sales Tax Rate

California’s statewide sales tax rate remains 7.25%. However, certain local jurisdictions have increased this rate through additional sales taxes, meaning the effective rate could be higher depending on your county. Be sure to factor this in if you’re claiming any sales tax deductions.

7. Student Loan Forgiveness and Income Tax

Federal: The federal government is actively implementing student loan forgiveness programs. However, any forgiven loans under the Public Service Loan Forgiveness (PSLF) program or income-driven repayment (IDR) plans are not taxable for federal tax purposes.
California: In contrast to federal law, California does tax student loan forgiveness. If you receive forgiveness under any of these federal programs, be aware that the forgiven amount may be subject to state income tax.

8. New Tax Filing Deadlines

As in previous years, the federal tax filing deadline remains April 15, 2025, unless you file for an extension.
In California, there is no change to the filing deadline, but certain counties affected by natural disasters (wildfires, floods, etc.) may have extended deadlines.

9. Estate and Gift Taxes

Federal: The federal estate tax exemption for 2024 is set at $13.92 million per individual, meaning estates below this threshold will not owe federal estate taxes.
California: California does not impose a state estate tax, so residents are only concerned with federal estate taxes.

10. Taxpayers with Virtual Currencies

Federal: If you traded or used cryptocurrencies in 2024, you must report any gains or losses on your tax return. The IRS continues to focus on virtual currency transactions, and failure to report them could lead to penalties.
California: California generally treats cryptocurrency in line with federal law, so be sure to track your cryptocurrency transactions and report them accurately when filing.

As always, it’s crucial to stay informed about any changes to the tax code and keep up with California-specific rules to avoid any surprises during tax season. If you’re unsure about anything, consider consulting with a tax professional to maximize your deductions and credits and ensure full compliance.

Happy filing! 🧾💰