Income

2023 income tax rates and brackets

The IRS on Tuesday released inflation-adjusted marginal rates and brackets for 2023, and many workers will see higher take-home pay in the new year as less tax is withheld from their paychecks. pay.

In addition, the agency published the standard deduction for the next year. It increases by $900 to $13,850 for single taxpayers, and by $1,800 for married couples, to $27,700. For heads of household, the 2023 standard deduction will be $20,800. That’s an increase of $1,400.

Here are the marginal rates for the 2023 tax year, depending on your tax status.

Single registrants

– 10%: income of $11,000 or less
– 12%: income between $11,001 and $44,725
– 22%: income between $44,726 and $95,375
– 24%: income between $95,376 and $182,100
– 32%: income between $182,101 and $231,250
– 35% income between $231,251 and $578,125
– 37%: income over $578,125

Married filing jointly

– 10%: income of $22,000 or less
– 12%: income between $22,001 and $89,450
– 22%: income between $89,451 and $190,750
– 24%: income between $190,751 and $364,200
– 32%: income between $364,201 and $462,500
– 35% income between $462,501 and $693,750
– 37%: income over $693,750

Additionally, the maximum earned income tax credit for 2023 is $7,430 for those with three or more eligible children. The maximum contribution to a flexible healthcare spending account is also increasing, from $2,850 to $3,050.

Wealthy Americans will also be able to exclude many more assets from estate tax in 2023. Individuals will be able to transfer up to $12.92 million tax-free to their descendants, up from just over $12 million. dollars in 2022. A married couple can transmit twice that. And the annual exclusion for gifts increases to $17,000.

Each year, the IRS adjusts dozens of important tax provisions based on a formula established by Congress. Given the spike in inflation rates over the past year, the adjustments for 2023 are larger than in previous years.

Assuming everything else remains the same, that means workers will see their take-home pay higher from January.

The agency has yet to announce maximum contribution amounts for 401(k) plans or income thresholds for retirement accounts for 2023. Last week, the Social Security Administration announced an adjustment to the cost high living standards for decades, also due to inflation. .

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