2024 Tax Legislation Changes
The latest changes in tax legislation for 2024 involve several key adjustments across different jurisdictions, including New Zealand, the United States, and the United Kingdom. These changes encompass various aspects such as income tax rates, capital gains tax, trustee tax rates, and specific state or national tax policies. For instance, New Zealand is introducing the OECD Pillar Two Global Minimum Tax Rules and increasing the trustee tax rate to 39%, while the U.S. is adjusting standard deductions and capital gains tax thresholds. The UK is making changes to capital gains tax rates on residential property and the High Income Child Benefit Charge threshold. These updates aim to reflect economic conditions, such as inflation, and to align with international tax standards.
Changes in New Zealand
New Zealand is set to implement several significant tax changes in 2024. One of the notable changes is the increase of the trustee tax rate to 39%, aligning it with the top personal tax rate. This change is part of the Taxation (Annual Rates for 2023–24, Multinational Tax, and Remedial Matters) Bill, which is currently in the Select Committee stage. Additionally, New Zealand will introduce the OECD Pillar Two Global Minimum Tax Rules, affecting multinationals with revenue over €750 million. The Digital Services Tax Bill, an alternative to the OECD's Pillar One solution, is also being considered to address the tax challenges arising from the digitization of the economy[1].
U.S. Tax Adjustments
In the United States, the IRS has made several adjustments for the 2024 tax year. These include increases to the standard deductions, with married couples filing jointly seeing a rise to $29,200 and single taxpayers experiencing an increase to $14,600. Capital gains tax thresholds have also been adjusted, with individual tax filers not having to pay capital gains tax if their total taxable income is $47,025 or less. Other changes include updates to the kiddie tax, flexible spending account limits, and health savings account deductibles[2].
UK Tax Reforms
The United Kingdom is introducing several tax reforms effective from 6 April 2024. One key change is the reduction of the higher rate of Capital Gains Tax for residential property gains from 28% to 24%. The High Income Child Benefit Charge threshold will also be increased to £60,000, with the charge applying at a reduced rate for incomes between £60,000 and £80,000. Additionally, the geographical scope of agricultural property relief and woodlands relief from Inheritance Tax will be restricted to property within the UK[4].
State Tax Changes in the U.S.
Several U.S. states are implementing tax changes effective July 1, 2024. California will introduce a state excise tax of 11% on retail sales of firearms, ammunition, and precursor parts. Colorado will increase tax rates on tobacco and nicotine products, with the tax on cigarettes rising from $1.94 to $2.24 per pack. Maryland and other states also have various tax changes, including adjustments to individual income tax rates and sales tax rates.
Impact on Other Taxes and Benefits
Changes to income tax rates and thresholds can have a ripple effect on other taxes and benefits. For example, in New Zealand, adjustments to income tax thresholds will also impact fringe benefit tax, employer superannuation contribution tax, resident withholding tax, and prescribed investor rates. Similarly, in the UK, changes to capital gains tax rates and the High Income Child Benefit Charge threshold will affect how these taxes are calculated and applied.