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2023 Tax Adjustments for Inflation

 The IRS announced on Tuesday, October 18 that several tax provisions would be changed for the 2023 tax year due to the high levels of inflation. The adjustments will be applicable in 2023 and relate to returns filed in 2024. There many changes, but we will cover the changes that apply to the majority of taxpayers. 

Adjusted 2023 Tax Brackets

Single

    • < $11,000: 10%
    • $11,000 - $44,725: 12%
    • $44,725 - $95,375: 22%
    • $95,375 - $182,100: 24%
    • $182,100 - $231,250: 32%
    • $231,250 - $578,125: 35%
    • > $578,125: 37%

Married Filing Jointly 

    • < $22,000: 10%
    • $22,000 - $89,450: 12%
    • $89,450 - $190,750: 22%
    • $190,750 - $364,200: 24%
    • $364,200 - $462,500: 32%
    • $462,500 - $693,750: 35%
    • >$693,750: 37%
Standard Deduction
  • Single- $13,850
  • Married Filing Jointly- $27,700
  • Head of Household- $20,800
Earned Income Credit

The maximum EIC for 2023 will be increased by $495, and appropriate adjustments will be made to all thresholds. 

Retirement Account Contributions

The maximum contribution limit for retirement accounts was also adjusted based on inflation. Now investors can contribute up to $6,500 to their IRA's with no penalty, and $22,500 to their 401(k), 403(b), and 457 plans. 

Other adjustments pertain to Adjusted Minimum Tax, Qualified Transportation Fringe Benefits, Employee Health Benefits, Medical Savings Accounts, Foreign Earned Income Exclusion, Estate exclusions, allowable adoption expenses, and the maximum yearly gift allowance. These changes are more specific in their application but could affect your personal taxes. For more information pertaining to these changes please see the IRS notice linked here




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