The IRS announced the tax year 2023 annual inflation adjustments.
If your salary hasn’t kept pace with inflation, you could see a decrease in the amount of income tax you owe.
The annual inflation rate for the United States is 8.2% for the 12 months ended September 2022 after rising 8.3% previously, according to U.S. Labor Department data published Oct. 13.
See if the adjustments will affect you
Here are some highlights for the tax items for the tax year 2023 of greatest interest to most taxpayers include the following dollar amounts:
The standard deductions:
$13,850 (up $900) for single taxpayers and married individuals filing separately
$20,800 (up $1,400) for married couples filing jointly
$27,700 (up $1,800) for heads of households
Marginal Rates: For tax year 2023, the top tax rate remains 37% for individual single taxpayers with incomes greater than $578,125 ($693,750 for married couples filing jointly).
The other rates are:
35% for incomes over $231,250 ($462,500 for married couples filing jointly);
32% for incomes over $182,100 ($364,200 for married couples filing jointly);
24% for incomes over $95,375 ($190,750 for married couples filing jointly);
22% for incomes over $44,725 ($89,450 for married couples filing jointly);
12% for incomes over $11,000 ($22,000 for married couples filing jointly); 10% for incomes of $11,000 or less($22,000 for married couples filing jointly).
The lowest rate is 10% for the incomes of single individuals with incomes of $11,000 or less ($22,000 for married couples filing jointly).
Earned income tax credit: $7,430 for qualifying taxpayers who have three or more qualifying children, up from $6,935 for tax year 2022.
- Annual exclusion for gifts: $17,000 up from $16,000 for calendar year 2022.
- For the taxable years beginning in 2023, the dollar limitation for employee salary reductions for contributions to health flexible spending arrangements increases to $3,050. For cafeteria plans that permit the carryover of unused amounts, the maximum carryover amount is $610, an increase of $40 from taxable years beginning in 2022.
For more information, learn more here.
Joola LLC and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.