IRS Provides Tax Inflation Adjustments for Tax Year 2023
Posted at 1:13 p.m. on Tuesday, October 18, 2022
WASHINGTON — The Internal Revenue Service today announced annual inflation adjustments for the 2023 tax year for more than 60 tax provisions, including tax rate schedules and other tax changes. Tax Procedure 2022-38 provides details on these annual adjustments.
New for 2023
The Inflation Reduction Act extended certain energy-related tax breaks and indexed the energy-efficient commercial building deduction to inflation beginning with the 2023 tax year. taxation 2023, the applicable dollar value used to determine the maximum deduction allowance is $0.54 increased (but not greater than $1.07) by $0.02 for each percentage point by which the annual costs energy and electricity totals for the building are certified reduced by a percentage greater than 25%. The applicable dollar value used to determine the amount of the increased allowance for certain property is $2.68 increased (but not above $5.36) by $0.11 for each percentage point by which the costs annual energy and electricity totals for the building are certified reduced by a greater percentage than 25 percent.
Highlights of changes in tax procedure 2021-38:
The adjustments for the 2023 tax year described below generally apply to tax returns filed in 2024.
The tax items for the 2023 tax year that most taxpayers are most interested in include the following dollar amounts:
- The standard deduction for married couples filing jointly for the 2023 tax year is $27,700, up $1,800 from the previous year. For single and married taxpayers filing separately, the standard deduction is $13,850 for 2023, up $900, and for heads of families, the standard deduction will be $20,800 for the year of 2023 tax, up $1,400 from the amount for the 2022 tax year.
- Marginal rates: For the 2023 tax year, the top tax rate remains 37% for single taxpayers with incomes over $578,125 ($693,750 for married couples filing jointly).
The other prices are:
35% for income over $231,250 ($462,500 for married couples filing jointly);
32% for income over $182,100 ($364,200 for married couples filing jointly);
24% for income over $95,375 ($190,750 for married couples filing jointly);
22% for income over $44,725 ($89,450 for married couples filing jointly);
12% for income over $11,000 ($22,000 for married couples filing jointly).
- The lowest rate is 10% for the income of single people with an income of $11,000 or less ($22,000 for married couples declaring jointly).
- The alternative minimum tax exemption amount for the 2023 tax year is $81,300 and begins to disappear at $578,150 ($126,500 for married couples filing jointly for whom the exemption begins to disappear at $1,156,300). The 2022 exemption amount was $75,900 and started to disappear at $539,900 ($118,100 for married couples filing jointly for whom the exemption started to disappear at $1,079,800).
- The maximum amount of earned income tax credit for the 2023 tax year is $7,430 for eligible taxpayers who have three or more eligible children, compared to $6,935 for the 2022 tax year. exits.
- For the 2023 tax year, the monthly limit for qualifying transportation benefits and the monthly limit for qualifying parking increases to $300, up $20 from the 2022 limit.
- For tax years beginning in 2023, the dollar limit for employee salary reductions for contributions to flexible health spending arrangements increases to $3,050. For cafeteria plans that allow carryover of unused amounts, the maximum carryover amount is $610, an increase of $40 from tax years beginning in 2022.
- For the 2023 tax year, participants who have personal coverage in a medical savings account plan must have an annual deductible that is not less than $2,650, up $200 from the 2022 tax year; but no more than $3,950, an increase of $250 from the 2022 tax year. For personal coverage, the maximum out-of-pocket amount is $5,300, up $350 from 2022 For the 2023 tax year, for family coverage, the annual deductible is not less than $5,300, compared to $4,950 for 2022; however, the deductible cannot exceed $7,900, which is $500 more than the limit for the 2022 tax year. For family coverage, the disbursement limit is $9,650 for the tax year 2023, an increase of $600 over the 2022 tax year.
- For the 2023 tax year, the foreign-earned income exclusion is $120,000, compared to $112,000 for the 2022 tax year.
- Estates of people who died in 2023 have a base exclusion amount of $12,920,000, compared to a total of $12,060,000 for estates of people who died in 2022.
- The annual exclusion for gifts increases to $17,000 for calendar year 2023, from $16,000 for calendar year 2021.
- The maximum credit allowed for adoptions for the 2023 tax year is the amount of eligible adoption expenses up to $15,950, compared to $14,890 for 2022
Items not affected by indexing:
By law, certain items that were indexed to inflation in the past are currently not adjusted.
- The personal exemption for the 2023 tax year remains at 0, as it was for 2022, this removal of the personal exemption was a provision of the Tax Cuts and Jobs Act.
- For 2023, as in 2022, 2021, 2020, 2019 and 2018, there is no limit on itemized deductions, as this limit was removed by the Tax Cuts and Jobs Act.
- The amount of modified adjusted gross income used by joint filers to determine the Lifetime Learning Credit reduction under § 25A(d)(2) is not adjusted for inflation for tax years beginning after December 31, 2020. The Lifetime Learning Credit is scaled for taxpayers with adjusted adjusted gross income over $80,000 ($160,000 for joint filings).