Tax season is here: The deadline for filing 2024 taxes is April 15, 2025, and taxpayers who wish to get a head start can file their returns beginning January 27, 2025.

The Internal Revenue Service (IRS) has made several inflation adjustments that take effect in tax year 2024. Here's an overview of some of the changes to keep in mind when preparing returns to help maximize refunds or lower amounts owed: 

✔️ Shift in tax brackets. While there are still seven tax rates, the IRS adjusted the income brackets for each rate, which may enable taxpayers to keep more of their 2024 income. The brackets vary according to filing status. For example:

Read more: 2024 & 2025 federal tax brackets and income tax rates

✔️ Standard deductions. The standard deduction increased slightly for 2024 to adjust for inflation. Depending on individual circumstances, using the flat standard deduction may offer the greatest tax savings. If itemizing deductions seems like a better option, it’s important to keep in mind that not all expenses qualify. 

Read more: How married filing separately works & when to do it

✔️ The Child Tax Credit. Parents may be able to claim a credit for each qualifying child in 2024 if the eligibility requirements are met.¹ The child must:

• Be under age 17 at the end of the tax year and be a son, daughter, stepchild, eligible foster child, brother, sister, stepbrother, stepsister, half-brother, half-sister, step-sibling, niece, nephew, or grandchild
• Live with the parent for at least half the tax year, and can’t provide more than half of their own financial support
• Be a U.S. citizen, U.S. national, or U.S. resident, and have a Social Security number (issued before the tax return date)
• Not file a joint return for the year

Additionally, the parent must claim the child as a dependent on their tax return. To claim the full credit, the parent’s income can be no greater than $200,000 ($400,000 for joint filers). Taxpayers who qualify may be eligible for some additional family tax credits as well.²

✔️ Larger limits for IRA and 401(k) contributions. Annual individual contribution limits increased slightly to $7,000 for IRAs and $23,000 and 401(k) and Roth 401(k)s went up to $23,000 for 2024.³ A new increased catch-up provision also allows workers ages 60-63 to contribute an extra $11,250 to their 401(k) annually. Along with giving a boost to retirement savings, contributing more could also provide a potential tax deduction.

Read more: New catch-up contribution: Retirement limit boosted for 401(k) savers in their early 60s

✔️ Higher Alternative Minimum Tax (AMT) exemption. The AMT exemption amount moved up to $85,700 for individuals and $133,300 for married couples filing jointly for tax year 2024.⁴ The phase out thresholds also bumped up to $609,350 for single filers and $1,218,700) for joint filers.⁵

✔️ Increased Health Spending Account (HSA) limits. Contribution limits for HSAs increased to $4,150 for individuals and $8,300 for families in 2024. Taxpayers aged 55 and older can maximize contributions by taking advantage of the $1,000 catch-up option. Along with being a great option for setting aside money to cover medical expenses, HSAs are among the most tax-efficient tools available with tax-free contributions, tax-free investment, and tax-free withdrawals.

Read more: What are the benefits of an HSA Account?

The bottom line

The filing method doesn’t provide a tax break, but taking advantage of Direct File could save on the cost of hiring a tax preparer. Launched as a 12-state pilot last year, Direct File is free of charge and has expanded to 25 states.⁶ Taxpayers must work and reside in a participating state for the full year.