News of the Day

The Internal Revenue Service recently announced the annual inflation adjustments for more than 60 tax provisions for tax year 2024, including the tax rate schedules and other tax changes.

The tax items for tax year 2024 of greatest interest to most taxpayers include the following dollar amounts:

• The standard deduction for married couples filing jointly for tax year 2024 rises to $29,200, an increase of $1,500 from tax year 2023. For single taxpayers and married individuals filing separately, the standard deduction rises to $14,600 for 2024, an increase of $750 from 2023; and for heads of households, the standard deduction will be $21,900 for tax year 2024, an increase of $1,100 from the amount for tax year 2023.
• Marginal rates: For tax year 2024, the top tax rate remains 37% for individual single taxpayers with incomes greater than $609,350 ($731,200 for married couples filing jointly).The other rates are:35% for incomes over $243,725 ($487,450 for married couples filing jointly)
  32% for incomes over $191,950 ($383,900 for married couples filing jointly)
  24% for incomes over $100,525 ($201,050 for married couples filing jointly)
  22% for incomes over $47,150 ($94,300 for married couples filing jointly)
  12% for incomes over $11,600 ($23,200 for married couples filing jointly)The lowest rate is 10% for incomes of single individuals with incomes of $11,600 or less ($23,200 for married couples filing jointly).
• The Alternative Minimum Tax exemption amount for tax year 2024 is $85,700 and begins to phase out at $609,350 ($133,300 for married couples filing jointly for whom the exemption begins to phase out at $1,218,700). For comparison, the 2023 exemption amount was $81,300 and began to phase out at $578,150 ($126,500 for married couples filing jointly for whom the exemption began to phase out at $1,156,300).

• For the taxable years beginning in 2024, the dollar limitation for employee salary reductions for contributions to health flexible spending arrangements increases to $3,200. For cafeteria plans that permit the carryover of unused amounts, the maximum carryover amount is $640, an increase of $30 from taxable years beginning in 2023.

• For tax year 2024, participants who have self-only coverage in a Medical Savings Account, the plan must have an annual deductible that is not less than $2,800, an increase of $150 from tax year 2023, but not more than $4,150, an increase of $200 from tax year 2023. For self-only coverage, the maximum out-of-pocket expense amount is $5,550, an increase of $250 from 2023. For tax year 2024, for family coverage, the annual deductible is not less than $5,550, an increase of $200 from tax year 2023; however, the deductible cannot be more than $8,350, an increase of $450 versus the limit for tax year 2023. For family coverage, the out-of-pocket expense limit is $10,200 for tax year 2024, an increase of $550 from tax year 2023.

• Estates of decedents who die during 2024 have a basic exclusion amount of $13,610,000, increased from $12,920,000 for estates of decedents who died in 2023.

• The annual exclusion for gifts increases to $18,000 for calendar year 2024, increased from $17,000 for calendar year 2023.

Republican members on the House Small Business Committee are criticizing the Consumer Product Safety Commission for a proposed rule for residential furnaces and boilers that could hit small businesses’ bottom line to the tune of $13.8 million per company.

Rep. Roger Williams, R-Texas., Rep. Blaine Luetkemeyer, R-Mo. and Rep. Aaron Bean, R-Fla., wrote the letter to Consumer Product Safety Commission Chair Alexander Hoehn-Saric on Thursday, stating that the proposed rule would impact small businesses in a major way.

The proposed rule would require all residential “vented gas furnaces, boilers, wall furnaces, and floor furnaces” to have a way of monitoring the concentration of carbon monoxide produced during the combustion process. Additionally, it would require that boilers and furnaces to shut down or cause modulation when carbon monoxide reaches specified levels.

“These new standards would require the small businesses that manufacture residential furnaces and boilers to abandon or redesign many of their product lines—an endeavor which could cost each small business up to $13.8 million. It appears that the Consumer Product Safety Commission (CPSC) may not have properly considered small entities during this rulemaking process,” the letter states.

“It is important for agencies to examine small business interests—which make up 99.9 percent of all businesses in the United States—when passing any new rule. America’s small businesses deserve to have their voices heard and considered,” the letter adds.

It’s not the first time the House Small Business Committee has questioned regulations proposed by the Biden administration.

Earlier in November, Williams and five other committee Republicans sent a letter to Energy Secretary Jennifer Granholm, asking for information about the potential impacts of proposed regulations tightening energy efficiency standards of refrigeration equipment.

Americans now owe $1.08 trillion on their credit cards, according to a new report on household debt from the Federal Reserve Bank of New York. Credit card balances spiked by $154 billion year over year, notching the largest increase since 1999, the New York Fed found.

“Credit card balances experienced a large jump in the third quarter, consistent with strong consumer spending and real GDP growth,” said Donghoon Lee, the New York Fed’s economic research advisor.

Credit card delinquency rates also rose across the board, according to the New York Fed, but especially among millennials, or borrowers between the ages of 30 and 39, who are burdened by high levels of student loan debt.

With most people feeling strained by higher prices — particularly for food, gas and housing — more cardholders are carrying debt from month to month or falling behind on payments, and a greater percentage of balances are going more than 180 days delinquent, according to a separate report from the Consumer Financial Protection Bureau.

Nearly one-tenth of credit card users find themselves in “persistent debt” where they are charged more in interest and fees each year than they pay toward the principal — a pattern that is increasingly difficult to break, the consumer watchdog said.

The Federal Communications Commission announced it will launch an inquiry to kick off the agency’s evaluation of the state of broadband across the country, as required by section 706 of the Telecommunications Act of 1996.

In light of the increasing uses and demands for broadband and the Congressional directives embodied in the Bipartisan Infrastructure Law,  this Notice of Inquiry (NOI) will take a fresh look at the Commission’s standards for evaluating broadband deployment and availability, the quality of the Commission’s available data, and the framework that the agency uses to make a finding under section 706.

In addition to focusing on a universal service standard, the NOI proposes to increase the national fixed broadband speed benchmark to 100 megabits per second for download and 20 megabits per second for upload, and discusses a range of evidence supporting this standard. The FCC previously set the benchmark at 25/3 Mbps in 2015 and has not updated it since. The NOI also seeks comment on setting a separate national goal of 1 Gbps/500 Mbps for the future.

Lastly, this inquiry will be the first to use the new Broadband Data Collection (BDC) data. In March 2020, Congress passed the Broadband DATA Act, which required the Commission to collect biannual data relating to the availability and quality of service of fixed and mobile broadband Internet access service for the Commission to create broadband coverage maps. Pursuant to the Act, the FCC now collects more precise, location-by-location broadband availability data through the BDC. Through this inquiry, the Commission will examine how these improvements to our data collection may impact the standards and inform the agency’s conclusions about broadband availability.

The National Association of REALTORS® says it will continue arguing its case against two class-action lawsuits challenging real estate compensation structures, even after one of NAR’s co-defendants reportedly agreed to a proposed settlement.

Anywhere Real Estate, formerly known as Realogy Holdings Corp., agreed to settle all claims against the company in the two cases, known as Sitzer/Burnett and Moehrl, according to news reports. Details of the settlement, which will need court approval, have not been released. No other parties named in the lawsuits, including NAR and several major real estate companies and MLSs, have agreed to settle.

The announcement of Anywhere’s settlement comes about a month before the Sitzer/Burnett lawsuit is set to go to trial.

“Settlement is always an option for any party in litigation. NAR’s commitment to defend ourselves in court remains unchanged, and we are confident we will prevail in proving the lawfulness of the rules under attack,” Mantill Williams, NAR’s vice president of public relations and communication strategy, said in a statement. “Pro-competitive, pro-consumer local MLS broker marketplaces ensure equity, efficiency, transparency and market-driven pricing options for home buyers and sellers. The practice of the listing broker paying the buyer broker’s compensation saves sellers time and money by having so many buyer brokers participating in that local marketplace and, thus, creating a larger pool of buyers for sellers. For buyers, these marketplaces save them the burden of extra costs at closing, enable them to receive professional representation and make homeownership possible for more people.”

The lawsuits claim that NAR rules violate antitrust laws and inflate the fees paid to buyer’s agents by requiring a listing agent to compensate a buyer’s agent for listing a property on the MLS. NAR argues that the lawsuits misrepresent association rules as anticompetitive. The rules direct listing brokers to determine, in consultation with their clients, the amount of compensation offered to a buyer’s agent in connection with their MLS listings. Further, NAR says buyer’s agents are free to negotiate compensation with the listing broker that is different from what appears in the MLS. Neither NAR nor the MLS has any say in setting broker commissions.

“The U.S. model of independent, local broker marketplaces is widely considered the best value and most efficient model in the world, with no hidden or extra costs and with more complete, verified information compared to other countries,” Williams said. “We look forward to arguing our case in court.”

The Federal Reserve on Wednesday again held benchmark interest rates steady amid a backdrop of a growing economy and labor market and inflation that is still well above the central bank’s target.

In a widely expected move, the Fed’s rate-setting group unanimously agreed to hold the key federal funds rate in a target range between 5.25%-5.5%, where it has been since July. This was the second consecutive meeting that the Federal Open Market Committee chose to hold, following a string of 11 rate hikes, including four in 2023.

The decision included an upgrade to the committee’s general assessment of the economy.

“The process of getting inflation sustainably down to 2% has a long way to go,” Fed Chair Jerome Powell said in remarks at a news conference. He stressed that the central bank hasn’t made any decisions yet for its December meeting, saying that “The committee will always do what it thinks is appropriate at the time.”

Powell added that the FOMC is not considering or even discussing rate reductions at this time.

He also said the risks around the Fed doing too much or too little to fight inflation have become more balanced.

Governor Tony Evers filed a lawsuit against Republican state lawmakers Tuesday, claiming their decisions to block pay raises for employees of the Universities of Wisconsin, conservation projects and updates to the state’s commercial building standards are unconstitutional.

The lawsuit, filed by Democratic Attorney General Josh Kaul on behalf of Evers, along with a host of state agencies and boards, also focuses on GOP actions to block 27 conservation projects funded through the Knowles-Nelson Stewardship Program. Evers’ lawsuit also argues Republicans overstepped their authority on administrative rules related to commercial building standards and ethics standards for social workers and counselors.

The case claims GOP lawmakers are violating the Wisconsin Constitution’s “well-defined separation of powers” by creating more and more “legislative vetoes” made by committees made up of a handful of legislators.

Evers’ administration is petitioning the Wisconsin Supreme Court to take the case as an original action, effectively asking the court’s new liberal majority to bypass lower courts.

In a statement responding to the lawsuit, Assembly Speaker Robin Vos, R-Rochester accused Evers and Kaul of “an attempt to eliminate” raises given to all state employees by the Legislature.  “In a time of unprecedented inflation brought on by reckless Democrat spending, we think it is abhorrent that the Governor would try and take away lawfully approved money for hardworking state employees,” Vos said.

State Senate Majority Leader Devin LeMahieu, R-Oostburg, said the Senate would defend the duties of the Legislature and called Evers’ lawsuit “frivolous.”

“The Governor is working to diminish the the voice of Wisconsinites by limiting the authority of the legislature and unduly strengthening his own administration,” LeMahieu said.

The rise in compensation reported on Tuesday by the Labor Department was slightly stronger than expected and helps to explain the surge in consumer spending last quarter, which contributed to the fastest economic growth pace in nearly two years.

Wages increased 1.2% in the third quarter after climbing 1.0% in the prior three months. They were up 4.6% on a year-on-year basis after advancing by the same margin in the second quarter. Wage growth continues to exceed pre-pandemic rates.

Private-sector wages gained 1.1% after rising 1.0% in the April-June quarter. They advanced 4.5% on a year-on-year basis.

State and local government wages shot up 1.8% after increasing 0.8% in the prior quarter. They were driven by rises in education and health services as well as public administration. State and local government wages increased 4.8% on a year-on-year basis.

Inflation-adjusted wages for all workers rose 0.9% on a year-on-year basis after jumping 1.7% in the second quarter. Benefits rose 0.9% last quarter after climbing by the same margin in the April-June period. They increased 4.1% on a year-on-year basis.

Freddie Mac reported Thursday that the average rate for the benchmark 30-year fixed mortgage has now hit 7.79%, up from 7.63% last week and from 7.08% a year ago.

The rate for a 15-year mortgage also climbed, averaging 7.03% after coming in last week at 6.92%. One year ago, the rate on a 15-year fixed note averaged 6.36%.

This is the seventh week in a row that rates have risen, marking the longest stretch of consecutive increases since spring 2022, Freddie Mac said.

Redfin estimates there will only be roughly 4.1 million sales of existing homes across the nation by year’s end due to persistently high mortgage rates and elevated home prices amid low inventory, which are causing prospective buyers to reconsider their plans.

The real estate brokerage also reported that 16.3% of home purchase agreements in the U.S. were canceled last month, the highest rate in nearly a year.