Economic and Tax Updates

2024 Economic Recap and Expectations for 2025

2024 has been a period of steady progress and recovery in the global economy, showcasing the resilience of both consumers and businesses. Inflationary pressures, particularly in energy markets, have eased, offering some degree of relief. In the United States, the economy has grown at a moderate pace, buoyed by cooling inflation and healthier supply chains.

As we approach 2025, there is an air of cautious optimism in economic forecasts. Global growth is projected to continue at a moderate pace with the International Monetary Fund predicting a 3.3% expansion for the coming year. Inflation is expected to continue its gradual decline, bringing more stability to household budgets and fostering more predictable business conditions. Central banks are likely to remain attentive to evolving conditions, with monetary policy in the United States on the path of steady rate cuts so long as inflation levels decline to policy target and overall labor market conditions are healthy.

U.S. tax policy will be a strong priority for the coming year as the Tax Cuts and Jobs Act (or TCJA) is set to expire at the end of 2025. Addressing the ongoing federal deficit will be one of the objectives of this legislative process. The incoming administration has expressed a desire to avoid raising taxes, instead favoring cost cuts. While cost cuts are a probable piece of the deficit reduction puzzle, tax increases in some form are also likely needed given the size of the deficit. We will continue to communicate as there are updates and as it becomes more clear what changes will occur.

Tax Updates for 2025

Looking ahead, here are some of the important tax updates for 2025:

• Standard Deduction: The standard deduction will increase to $15,000 for single filers and $30,000 for married couples filing jointly.
• Tax Brackets: Federal income tax brackets have been adjusted upward by approximately 2.8%, keeping pace with inflation and ensuring fair treatment for taxpayers.
• Retirement Account Contributions: The contribution limit for 401(k)/403(b)/457 plans will increase to $23,500. The catch-up contribution limit for these accounts is $7,500 for taxpayers over the age of 50. The IRA contribution limit remains at $7,000. The IRA catch-up contribution limit is also unchanged at $1,000 for taxpayers over the age of 50.  
• Qualified Charitable Distributions (QCDs): The annual limit on qualified charitable distributions will increase $3,000 to a new annual limit of $108,000.  
• Estate and Gift Tax Exclusions: The estate tax exemption will rise to $13.99 million, and the annual gift tax exclusion will increase to $19,000 per recipient.