The Internal Revenue Service on Tuesday announcement rule adjustments to account for inflation for the 2023 tax year, including bracket changes and the standard deduction.
The IRS releases inflation adjustments every year, but this year’s announcement comes amid heightened economic concerns about high inflation and a potential recession.
The adjustments apply to the 2023 tax year, for which tax returns will generally be filed in 2024. higher living end up pushing taxpayers towards higher incomes. tax brackets.
The standard deduction will increase by $1,800 for married couples filing jointly, $1,400 for heads of families and $900 for single and married taxpayers filing separately.
Income thresholds for tax brackets are among the rule changes “of greatest interest to most taxpayers,” according to the IRS. The tax rates themselves are unchanged from last year, ranging from 10% to 37%, but the income thresholds have changed.
The 37% top rate applies to individual single taxpayers with income over $578,125 and married couples filing jointly with income over $693,750 – figures up from the $539,900 and $647,850 of last year, respectively.
The lower rate of 10% applies to single taxpayers with income of $11,000 or less and married couples filing jointly with income of $22,000 or less, compared to $10,275 and $20,550 respectively. last year.
A single taxpayer earning $90,000 in the 2022 tax year would face a top tax rate of 32%, while the same income in the year 2023 would face a top rate of 24%. %.
Other changes announced by the IRS also affect the earned income tax credit, property taxes, and flexible spending accounts, among other provisions.