How Other Tax Provisions Changed for 2023
The standard deduction has received a significant upgrade, resulting in even more money staying in your pocket. If you’re married and filing jointly, rejoice!
The standard deduction has surged by nearly 7%, skyrocketing to an impressive $27,700 in 2023, up from $25,900 in the previous year. Single filers, you’re in luck too! You can now claim an increased deduction of $13,850, up from $12,950.
This change is massive, considering that about 90% of Americans opt for the standard deduction rather than itemized deductions. So, prepare yourself for a pleasant surprise when you see the impact on your bottom line this year.
But wait, there’s more! The 2023 tax provisions bring a treasure trove of improvements across the board. It’s not just about deductions – we’re talking about exciting boosts to other tax provisions that will leave you grinning from ear to ear.
Prepare to be wowed by higher contribution limits for 401(k)s and individual retirement accounts, generous federal estate tax exemptions, and so much more! The opportunities are endless.
2022-2023 Tax Brackets and Federal Income Tax Rates [Updated]
Are you tired of feeling clueless about tax brackets and rates? Let’s face it, most of us don’t keep up with the nitty-gritty details. However, what if we told you that your hard-earned money and spending power could be influenced by the very same thing that impacts the ever-changing tax landscape? That’s right; we’re talking about inflation!
We all know about the seven U.S. federal tax rates—10%, 12%, 22%, 24%, 32%, 35%, and 37%. The tax rates are here to stay until 2025, thanks to the Tax Cuts and Jobs Act of 2017.
However, the income thresholds used to determine which tax bracket you fall into have experienced significant adjustments to account for inflation, which has caused the most substantial price increases in decades.
The Internal Revenue Service (IRS) makes these adjustments to avoid the dreaded “bracket creep.” Imagine being pushed into a higher income tax bracket or losing out on credits and deductions due to inflation. The IRS helps prevent such situations by ensuring that your tax bracket doesn’t skyrocket as your cost of living rises.
So, paying attention to tax brackets might just save you some money! In fact, the tax brackets for the 2023 tax year have already been released, and they show a significant increase of over 7% compared to last year’s modest 3% uptick.
Now that we’ve piqued your interest, let’s delve deeper. The tax brackets for the 2022-2023 season —the return you either filed by April 2023 or must now file by October 2023—as well as for the 2023 tax year—the return you’ll file in 2024— can be found on this blog post along with all the essential details to help you make informed financial decisions and maximize your tax efficiency!