Tax Changes Coming in 2023

As the 2022 Tax Season has come to a close for those who have not extended, we are starting to look ahead at the changes coming for the 2023 tax year. There are quite a few adjustments on the way, many of which are very broad and will impact nearly all taxpayers. The changes listed below work to bring some much needed relief to dollar limits of certain tax items amid continuing inflation. Please see some of the highlights below of the changes you can expect to see on your return next year:

• Federal income tax brackets will increase by roughly 7%, allowing taxpayers to shield more of their hard-earned income from taxation. For example, single taxpayers earning $44,726 to $95,375 will pay $5,147 plus 22% of the amount over $44,725. Married taxpayers filing jointly making $89,451 to $190,750 will pay $10,294 plus 22% of the amount over $89,450. Outside of those parameters? You can find your 2023 tax bracket information here.
• The standard deduction is increasing from $25,900 in 2022 to $27,700 for married couples filing jointly and from $12,950 to $13,850 for single taxpayers.
• The earned income tax credit amount will jump to $7,430 for qualifying taxpayers with three or more children, up from $6,935 for tax year 2022.
• The new IRS limit for FSA contributions for 2023 is $3,050, an increase of 7% from 2022’s threshold of $2,850.
• Taxpayers will be able to give up to $17,000 in gifts in 2023 without paying taxes, up from $16,000 in 2022.
• The IRS will exempt up to $12.92 million from the estate tax, up from $12.06 million for people who died in 2022 — another increase of roughly 7%.
• The tax changes come days after the government announced that millions of Social Security recipients will get an 8.7% boost in their benefits in 2023 — an average of $140 per month.

If you would like further information on how any of the coming changes will impact your 2023 tax year, please head over to our contact page and reach out for further assistance!