Article
Post-TCJA planning and projected 2024 bracket changes
2023 year-end tax letter
Oct. 30, 2023 · Authored by Michelle Hobbs, Paul Dillon
Approximately two years from now, absent congressional action, the individual tax environment will change significantly. After 2025, individual tax provisions enacted under the Tax Cuts and Jobs Act (TCJA) automatically expire. Key items include the top tax rate for individual taxpayers reverting to 39.6% (applying at approximately $553,600), ending the 20% §199A qualified business income deduction, removing the $10,000 cap on the state and local tax deduction and reinstating the personal and dependent exemption deductions, plus the income phase-outs. The standard deduction will be cut almost in half and the child tax credit will be reduced. Additionally, the alternative minimum tax (AMT) exemptions and phase-outs will revert to pre-TCJA levels. Coupled with the SALT cap removal, this will likely place more taxpayers into AMT beginning in 2026.
Not only are many TCJA provisions set to expire, but many amounts used regularly from the Internal Revenue Code are tied to the chained Consumer Price Index. This means tax brackets and thresholds change during periods of inflation. Furthermore, these inflation adjustments impact the section 199A qualified business income deduction, excess business loss threshold, and the Social Security wage base, among others. Generally, the IRS releases final adjustments during the fall. However, given the continuing price volatility, it is possible that final adjustment information will be released later than normal.
The charts below summarize key rates for 2023, plus projected 2024 and estimated amounts for post-2025.
Individual taxes
| Tax item | 2023 | Projected 2024 | Post 2025 estimates |
| Married filing joint – top bracket | 37% for taxable income over $693,750 | 37% for taxable income over $731,200 | 39.6% for taxable income over $553,600 (adjusted for inflation) |
| Single – top bracket | 37% for taxable income over $578,125 | 37% for taxable income over $609,350 | 39.6% for taxable income over $492,000 (adjusted for inflation) |
| Capital gains – married filing joint | 15% rate with net capital gain between $89,250-$553,850; 20% over $553,850 | 15% rate with net capital gain between $94,050-$583,750; 20% over $583,750 | 15% rate for taxpayers in 25-35% brackets; 20% rate for those above 35% bracket. |
| Capital gains – single | 15% rate with net capital gain between $44,625-$492,300; 20% over $492,300 | 15% rate with net capital gain between $47,025-$518,900; 20% over $518,900 | 15% rate for taxpayers in 25-35% brackets; 20% rate for those above 35% bracket. |
| Standard deduction – married filing joint | $27,700 | $29,200 | Pre-TCJA amount was $12,700 |
| Standard deduction – single | $13,850 | $14,600 | Pre-TCJA amount was $6,350 |
| Alternative minimum tax exemption | $81,300(S)/$126,500(MFJ) | $85,700(S)/$133,300 (MFJ) | |
| §199A qualified business income deduction income limitation – married filing joint | $364,200 | $383,850 | Not applicable – provision expires |
| §199A qualified business income deduction income limitation – single | $182,100 | $191,900 | Not applicable – provision expires |
| Excess business loss disallowance threshold – married filing joint | $578,000 | $610,000 | TBD, provision expires after 2028 |
| Excess business loss disallowance threshold – single | $289,000 | $305,000 | TBD, provision expires after 2028 |
| Social Security wage base | $160,200 | $168,600 | $174,900 (2025)/$181,200 (2026) |
