IRS puts out new tax rates and deductions for 2023; details here
The standard deduction is also going to increase from $25,900 in 2022 to $27,700 in 2023 for married couples who are filing jointly
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Amid rising inflation, the Internal Revenue Service (IRS) has announced higher federal income tax brackets and standard deductions for 2023. The agency has increased the income thresholds for each bracket for tax year 2023, which apply to returns filed in 2024. These brackets show the amount taxpayers will owe for federal income taxes on each portion of their taxable income, which is calculated by subtracting the standard or itemised deductions from the adjusted gross income.
The standard deduction is also going to increase from $25,900 in 2022 to $27,700 in 2023 for married couples who are filing jointly. For single taxpayers and married individuals filing separately, the standard deduction will increase $900 to $13,850 for 2023. For heads of households, the standard deduction is going to be $20,800 for tax year 2023, up by $1,400.
For tax year 2023, the top tax rate is still 37 percent for individual single taxpayers with incomes higher than $578,125 ($693,750 for married couples who are filing jointly). To know the other rates, visit the official website of IRS. The lowest rate is 10 percent for single individuals with incomes of $11,000 or less ($22,000 for married couples who are filing jointly).
Here are some of the highlights of changes in Revenue Procedure 2022-38:
The alternative minimum tax exemption amount for tax year 2023 is $81,300 and starts to phase out at $578,150 ($126,500 for married couples filing jointly for whom the exemption starts to phase out at $1,156,300).
The maximum earned income tax credit amount for tax year 2023 is $7,430 for qualifying taxpayers who have three or more qualifying children, an increase from $6,935 for tax year 2022.
The revenue procedure consists of a table providing maximum EITC amount for other categories, income thresholds and phase-outs.
The foreign earned income exclusion for tax year 2023 is $120,000, a hike of $8,000 from tax year 2022.
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