Inflation may be cooling, but high prices are still everywhere. There's some good news: More relief could be on the horizon. Tax credits, state rebates, and even hero pay could mean more money in your pocket next year. Here's a look at free money—and employer benefits that are like free money—that you could be entitled to in 2024.
1. Employer benefits
401(k) or 403(b) matches. If you have one of these retirement accounts through work, your employer might match your contributions as part of your compensation package. The amount they'll match varies by organization, but it could be 50 cents or a dollar for each dollar you contribute, up to a certain percentage of your salary. If you're able, contribute at least enough to your plan to capture the full match, which is like free money. Whatever your employer adds to your retirement savings could mean more money for you in retirement.
Other pre-tax accounts. Do you have access to a flexible spending account (FSA) or health savings account (HSA)? They allow you to set aside tax-free money to pay for health care costs. Any withdrawals are also tax-free, as long as you use them to cover qualified medical expenses.1 This helps you save for health-related expenses—such as doctor visits, medication, and more—that you'd already be paying for, but you get to save on the taxes when paying for them.
Similarly, if you commute to your workplace, you may be able to take advantage of a commuter benefit that allows you to use pre-tax dollars for eligible transit and parking expenses. Because there's less overall income to tax, it's like getting a discount to buy train and bus tickets and parking passes.
Reimbursements. Your employer might offer to pay you back for a portion of wellness and education expenses, such as gym memberships and tuition costs. Check out what your company reimburses and if that includes expenses you'd incur anyway, consider taking advantage.
2. Earth-friendly federal tax credits
As part of the Inflation Reduction Act, which began rolling out in 2023, tax credits are available to people who have made their homes more energy efficient.
Energy Efficient Home Improvement Credit.You can get a 30% credit on qualified expenses on energy-efficient improvements made in 2023. (It’s nonrefundable, which means if you owe less in taxes than the credit amount, you don’t get any portion as a refund.) These improvements include exterior doors, windows, and skylights that meet Energy Star requirements, as well as insulation and air-sealing materials or systems that meet International Energy Conservation Code standards. Other qualified expenses may include central air conditioners, heat pumps, and even home energy audits. The tax credit can be claimed for up to $3,200, but there are maximums on the types of improvements—for example, $1,200 for energy property costs with limits on doors ($500), windows ($600), and home energy audits ($150). The limit for heat pumps and biomass equipment tops out at $2,000.
Residential Clean Energy Credit. If you’ve made energy improvements to your main home—whether you own or rent—you may qualify for this nonrefundable credit. It equals 30% of the costs of new, clean energy equipment installed in 2023. Unlike the Energy Efficient Home Improvement Credit, improvements made in 2022 also count for tax year 2023. Qualified expenses include solar electric panels, solar water heaters, wind turbines, and more. Also, unlike the Energy Efficient Home Improvement Credit, there are no limits on the credit for most purchases.
New Clean Vehicles Credit. If you bought a new plug-in electric or fuel cell vehicle in 2023, you might be eligible for a nonrefundable credit of up to $7,500. The exact amount depends on when you received the car, its manufacturer suggested retail price (MSRP), its battery component, your modified adjusted gross income (MAGI), and more. Income limits are $300,000 for married couples filing jointly, $225,000 for heads of households, and $150,000 for other filers. The criteria for receiving the credit have changed since 2022. This credit was modified this year such that a buyer can apply the credit at time of purchase, opposed to waiting until filing their tax return.
If you bought a used EV or fuel cell vehicle, you could qualify for a credit of 30% of the sale price, up to $4,000.
3. Other federal tax credits
While these credits have been around for a while, some of them have increased, which could mean a lower tax bill—and in some cases a higher refund.
Child Tax Credit allows you to claim a $2,000 nonrefundable credit per qualifying dependent child who’s under 17 by the end of 2023 if your MAGI is up to $400,000 for married couples filing jointly or up to $200,000 for other filers. (Parents and guardians with higher MAGIs might qualify for a partial credit.) If you can’t claim the full Child Tax Credit because the amount is more than the taxes you owe, you might be able to claim the Additional Child Tax Credit, which is partially refundable. So even if you don't have a tax bill, you could get a refund up to $1,600. Consider consulting with a tax professional to see if you qualify.
Child and Dependent Care Credit. This is intended to cover childcare expenses, or the care of a spouse or parent who isn't mentally or physically able to care for themselves, while you work or look for work. The partially refundable credits up to $1,050 for one child or dependent, or up to $2,100 for 2 or more children or dependents.
Lifetime Learning Credit .You can claim up to $2,000 on qualified tuition and education-related expenses paid toward undergraduate, graduate, and professional degree courses, including skill development courses. Individuals can't make more than $90,000, and the cap is $180,000 for joint filers. This is a nonrefundable credit.
American Opportunity Tax Credit . In one of your first 4 years of higher ed? Attending at least half-time and pursuing a degree or other qualified credential? You could get up to $2,500 off your tax bill—or a refund up to $1,000—if your MAGI is $80,000 or less (or $160,000 or less if you're married filing jointly). You could qualify for a portion of the credit if you make over $80,000 but less than $90,000 (or over $160,000 but less than $180,000 if you're married filing jointly).
Adoption Credit . You can get up to $15,950 in adoption costs per child in 2023. This credit decreases at certain income levels, starting at $239,230 MAGI. People are not eligible if their MAGI is $279,230 or more. It's a nonrefundable credit.
Saver's Credit . Contribute to an IRA or retirement plan? You may be able to receive a credit worth up to 50% of your 2023 IRA contribution or retirement savings, up to a max of $4,000 if you're married filing jointly or $2,000 for all others. The exact percentage depends on your filing status and income. Other requirements: You must be over 18, you can't have been a student in 2023, and no one can claim you as a dependent. Adjusted gross income limits to receive any portion of the credit: $73,000 or less, if you're married filing jointly, $54,750 or less, if you're filing as a head of household, or $36,500 or less for all other filers. Check out the percentage you may qualify for.
4. State payments
While most states stopped sending economic stimulus checks to taxpayers, some groups in a few states may be eligible for other types of refunds or credits. It’s also worth knowing that the federal government has allocated $4.3 billion in grants to state energy offices partially for Home Efficiency Rebates programs, so your state might offer additional rebates in 2024 when you file your 2023 taxes.
Colorado. The Taxpayer's Bill of Rights (TABOR) Amendment limits the amount of revenue the state can retain and spend, requiring anything over that amount be returned to taxpayers. For 2024, the governor’s economists expect a $3.5 billion surplus to get distributed based on taxpayers’ income. The Legislative Council Staff projects single filers who earned up to $51,000 in 2023 to receive $586 in 2024, and the highest refund of $1,834 is expected to go to those who make $310,001 and over. Refund amounts are doubled for joint filers. People will receive their TABOR refund after they file their 2023 tax returns.
Montana. A property tax rebate is available to some Montana homeowners on their primary residence for the total amount billed and paid in property taxes, up to $675. For example, if a taxpayer pays $375 in property taxes on a principal Montana residence for tax year 2023, $375 would be the amount of the rebate, if eligibility requirements are met. Taxpayers can apply for the 2023 property tax rebates through the state’s online TransAction Portal or via a paper form between August 15, 2024, and October 1, 2024. Residents will receive rebates within 30 days of filing their claim online. Paper filers’ rebates will be processed within 90 days, with checks following as much as 4 weeks later.
New Jersey. Through the Affordable New Jersey Communities for Homeowners and Renters (ANCHOR) Program, those who owned homes in New Jersey in 2020 and, that same year, earned up to $150,000 may receive $1,500 rebates on their property taxes, while those who earned between $150,000 and $250,000 may receive $1,000. Renters who earned up to $150,000 are entitled to $450. Most eligible New Jersey residents will automatically receive their rebate, but if you haven’t received a letter about qualifying, you’ll need to apply.
Oregon. Some taxpayers could get money back after they file their state taxes in 2024. Because of a $5.61 billion surplus in the 2021 through 2023 budget, the Oregon Department of Revenue will allow residents to claim a “kicker” credit on the 2023 taxes they file in 2024 (it can only be claimed in even-numbered years). To figure out how much you will receive, multiply your 2022 state tax liability before any credits by 44.28%. The median rebate is slated to be $980, the largest since 1985, when the state first started issuing the credit.
Washington. The new Working Families Tax Credit will provide low-to-moderate income Washington residents with payments up to $1,200. The amount you qualify for depends on your income and the number of children you can claim, and it’s a refund of retail sales or use tax (which you might have paid instead of sales tax on certain items or services). You can check your eligibility and apply now. After you submit your application, it can take up to 90 days to receive an approved refund.
5. Hero pay
Some states are experiencing a shortage in essential workers in fields such as health care and education. These states are offering incentives to people who currently work in—or are training for—certain professions.
Health care workers in New York. The Empire State is continuing its Health Care and Mental Hygiene Worker Bonus Program from 2022. It rewards frontline health care and mental hygiene workers who provide hands-on care to people in New York, regardless of where the workers live. Qualified applicants could receive up to $3,000.
You may be eligible if your annualized base salary (not counting bonuses or overtime pay) is $125,000 or less, whether you’re full time, part time, temporary, or an independent contractor. Your employer must apply on your behalf and the final employer submission close date is May 1, 2024.
Teachers in California. The Golden State Teacher Grant Program awards up to $20,000 to students in a credentialed preparation program and working on their preliminary teaching or pupil personnel services credential. To get the grant, students need to complete their program within 6 years and commit to working at certain schools for 4 years within 8 years of completing the program.