As high-income earners, physicians are often asking how they can save on taxes, especially for W-2 physicians with little to no self-employed income to take advantage of 1099 tax breaks. Being knowledgable of tax brackets and contribution limits for tax advantaged accounts is essential when tax planning for each year.
Below, we cover key changes by the IRS for 2024 regarding tax brackets, contribution limits on tax-advantaged accounts such as retirement accounts, HSAs, 529s, and more.
Latest update: November 2023, for 2024 changes
As always, note that we are not accountants and you should consult appropriate expertise before taking action based on these ideas, which are not individualized to your personal situation. You should make sure this is accurate and up to date. To learn more, visit our disclaimers and disclosures.
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Updates to Tax Brackets and Federal Income Tax Rates
For the 2024 tax (tax return due in 2025), the IRS has adjusted the federal income limits for marginal tax rates for inflation to the following.
Tax Rate | Single | Head of Household | Married Filing Jointly or Qualifying Widow | Married Filing Separately |
10% | $0 to $11,600 | $0 to $16,550 | $0 to $23,220 | $0 to $11,600 |
12% | $11,601 to $47,150 | $16,551 to $63,100 | $23,221 to $94,300 | $11,601 to $47,150 |
22% | $47,151 to $100,525 | $63,101 to $100,500 | $94,301 to $201,050 | $47,151 to $100,525 |
24% | $100,526 to $191,950 | $100,501 to $191,950 | $201,051 to $383,900 | $100,525 to $191,950 |
32% | $191,951 to $243,725 | $191,951 to $243,700 | $383,901 to $487,450 | $191,951 to $243,725 |
35% | $243,726 to $609,350 | $243,701 to $609,350 | ​$487,451 to $731,200 | $243,726 to $365,600 |
37% | $609,351 or more | $609,351 or more | $731,201 or more | $365,601 or more |
Need more guidance? Learn more about how marginal tax rates work.
2024 IRS Tax Updates for Employer Retirement Plans
Along with increasing the top incomes for tax brackets, the IRS also announced 2024 cost-of-living adjustments to employer-sponsored retirement plans.
These plans can offer tax advantages for both W-2 and 1099 physicians.
Learn more about the different employer-sponsored retirement plans. 1099 physicians can learn more about retirement plans available to them on our self-employed finances page.
For tax year 2024 (tax returns due in 2025), key numbers to note for physicians include:
Employees can contribute through elective deferrals up to a maximum total of $23,000 across their 401(k), 403(b), and eligible 457(b) plans.
Catch-up contributions for individuals 50 and older remains at $7,500, allowing them $30,500 for 2024.
The annual addition limit for 2024 increased to $69,000. This includes employee contributions, employer match/contributions, Mega Backdoor Roth IRA contributions, etc.
The annual benefit for defined benefit plans increased to $275,000.
A big change in 2024, per the Secure Act 2.0, is that there are no longer required minimum distributions (RMDs) for Roth 401k accounts. Up until now, those electing to do a Roth 401k were still subject to the same required minimum distributions as traditional 401k accounts. This was strangely unlike Roth IRAs where the same rationale should apply that the taxes had already been paid on the contributions, and therefore required RMDs were not required. This could dramatically shift the attractiveness of the Roth 401k election versus the traditional 401k for many physicians who prefer to keep their money in the accounts for continued tax free growth.
2024 IRS Tax Updates for IRA Retirement Plans
The IRS increased the annual contributions limit for IRAs as well, from $6,500 to $7,000 for 2024. The catch-up contribution for individuals 50 and over remained $1,000, allowing them up to $8,000 a year.
As a reminder, this contribution limit applies to:
Traditional IRAs
Roth IRAs
Learn more about individual retirement accounts (IRAs).
2024 IRS Tax Updates for HSAs
We love Health Savings Accounts as a tax-advantaged option to help our physician members achieve financial independence, so long as a high-deductible health plan (HDHP) fits their family’s medical needs.
For 2024, individuals will be allowed to contribute $4,150
Families will be allowed to contribute $8,300
The catch-up contribution for individuals 55 and older will remain $1,000 for both situations
Changes to 529 College Savings Plans for 2024
We love the tax advantages offered by 529 plans, which can be used for more than just college tuition and room and board now.
For 2024, the gift tax limit (which covers how much you can contribute into a 529 plan) increased to $18,000. Remember, this is per person per child/beneficiary.
529 plans will now allow Roth IRA rollovers under certain circumstances, allowing unused funds of up to $35,000 to transfer out. Visit our 529 plans page for more information. (The annual Roth IRA contribution limit mentioned above still applies.)
Other 2024 IRS Tax Updates Physicians Should Know
Along with the income and retirement tax changes above, the following IRS tax changes can also be beneficial for physicians and other high-income earners to be aware of.
Standard Deduction for Taxes
Along with the changes to the 2024 income tax rates, the IRS also increased the standard deduction for tax year 2024 (tax returns due in 2025) to:
$14,600 for single taxpayers
$27,700 for married couples filing jointly
Alternative Minimum Tax
The Alternative Minimum Tax exemption amount for tax year 2024 increased to:
Single filers: $85,700 with a phase out beginning at $133,300
Married filing jointly couples: $133,300 with a phase out beginning at $1,218,700
Estate and Gift Taxes
For estate planning, the IRS changed the following limits for 2024.
Estate tax exclusions increased to $13,610,000
The annual gift tax exclusion increased to $18,000 (important for 529 plans)
Additional Resources
We have a financial advisors database if you need help starting any of the tax-advantaged accounts below, or need professional advice on what the best investment strategy is for your current situation.
Visit the IRS for official guidance on the following changes highlighted below:
Visit our guide to retirement accounts for physicians for more information on:
Traditional versus Roth accounts for retirement planning
401(k), 403(b), and 457 plans
Individual retirement accounts (IRAs)
Visit our self-employed taxes page for more information on:
Tax deductions
Self-employed retirement plan options
You can also explore the topics below in more depth across our website: