Taxable Income – An Inflation Response
Taxable Income – An Inflation Response
In case you missed it, inflation has bumped up prices for food, energy, and fuel. For the 2023 Tax Filing Season, the Internal Revenue Service has made some inflation adjustments that can help.
Here’s Some That Will Affect You:
What’s Changed
Federal income tax thresholds have increased by roughly 7% by bracket.
How Does It Affect Me
These increases will allow many to stay in a lower tax bracket.
What’s Changed
Standard deductions have increased across all filing statuses.
How Does It Affect Me
– Single and Married Filing Separately: The standard deduction will increase by $900. ($13,850)
– Married Couples Filing Jointly: The standard deduction will increase by $1,800. ($27,700)
– Head of Household/Ages 65 and Up: The standard deduction will increase by $1,500. ($20,800)
Example
In 2023, a married couple filing jointly could make a maximum of $89,450 to remain in the 12% bracket, compared to $83,550 in tax year 2022.
Bottom-line:
These increases and additional credits will allow taxpayers to reduce their taxable income and keep more income in their pockets.
See all Tax Bracket Adjustments and changes at irs.gov/newsroom