Hey Reader!

One of your colleagues recently asked about what tax changes they might expect next year compared to this year (2023).

Tax Winter is coming, and over the next month I want to cover tax law changes that will impact the way creators benefit during 2024 tax year - from bracket changes to vehicle asset depreciation.

Tax Bracket Adjustments for Inflation

In both Canada and the United States, tax bracket ranges increase to account for inflation. For the tax year 2024, both countries have seen marginal rate changes. In Canada, individual tax brackets have been adjusted upward to accommodate inflation, providing a measure of relief for Creators as their income increases. A Creator earning roughly $53,000 would be taxed at 15% in 2023, while a Creator earning roughly $56,000 would be taxed at the same 15% in 2024.

​Similarly, the United States has made adjustments to the income thresholds for tax brackets, aligning them with the rising cost of living by increasing the bracket ranges by about 5.4%.

Rony - that all sounds great but what does that actually do for me? In plain terms, the cost of tax has gone down. Earning more money within a tax bracket, that would have otherwise jumped over into a higher one in previous years proves this. However, comparing these tax adjusted bracket increases to the inflation rate as a consumer is an entirely different topic.

Evolving Vehicle Deductions

Changes in vehicle deductions present notable shifts in the tax landscape for creator businesses. However, the main focus of this section is on the tax strategy known as The Accelerated Investment Incentive in Canada, and Bonus Depreciation in the United States. This is a strategy that, in former years, allowed creator businesses to write-off the full purchase price of their asset in the year the vehicle was put into use.

In Canada, the rules regarding vehicle expenses have been modified, and only 75% of the cost of the vehicle purchased in 2024 will be deductible in 2024.

In the United States, only 60% will be deductible in 2024, down from 80% this year.

Staying informed about these changes is crucial for those who rely on vehicles for work-related activities, as it directly influences their eligibility for deductions and, consequently, their overall tax liability.

Stay tuned over the next few editions as we cover more tax changes so that you remain aware and in control of your business.

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