The IRS has released numerous inflation adjustments affecting individual income tax brackets, deductions and credits for the 2023 tax year. Due to outrageous inflation during 2022 increases in the various adjustments is very large.
For instance, the standard deduction for a married couple filing a joint tax return will increase to $27,700.00 in 2023 from $25,900.00 in 2022. For singles and couples and filing separately it will rise to $13,850.00 from $12,950.00 and for a head of household it will rise to $20,800.00 from $19,400.00.
Also, the various tax brackets all will be increasing by approximately 7%. In that regard, I have attached a chart showing all of the new brackets for ordinary income in 2023.
Inflation also means that individuals will be able to transfer more to their heirs tax-free during life or upon death. Starting in 2023, you will now be able to give $17,000.00 in gifts not utilizing your lifetime gift and estate tax exemption for paying gift tax. That amount was $16,000.00 in 2022. Also, the lifetime exemption will be increasing to $12,920,000.00 in 2023 up from $12,060,000.00 in 2022. That is an increase of $860,000.00 that an individual can leave to their heirs without incurring any federal estate taxes. However, please note that the exemption is due to expire by the year 2026 and in the event a taxpayer would like to utilize this exemption it is imperative that they do so before then.
Married Individuals Filing Jointly and Surviving Spouses (Joint) Tax Rates 2023
If taxable Income Is The Tax Due is
$0 – $22,000 10% of taxable income
$22,000 – $89,450 $2,200 + 12% of the amount over $22,000
$89,450-$190,750 $10,294 + 22% of the amount over $89,450
$190,750 – $364,200 $32,580 + 24% of the amount over $190,750
$364,200 – $462,500 $74,208 + 32% of the amount over $364,200
$462,500 – $693,750 $105,664 + 35% of the amount over $462,500
over $693,750 $186,601.50 + 37% of the amount over $693,750
Heads of Household Tax Rates 2023
If taxable Income Is The Tax Due is
$0 – $15,700 10% of taxable income
$15,700 – $59,850 $1,570 + 12% of the amount over $15,700
$59,850-$95,350 $6,868 + 22% of the amount over $59,850
$95,350 – $182,100 $14,678 + 24% of the amount over $95,350
$182,100 – $231,250 $35,498 + 32% of the amount over $182,100
$231,250 – $578,100 $51,226 + 35% of the amount over $231,250
over $578,100 $172,623.50 + 37% of the amount over $578,100
Individual Taxpayers (Single) Tax Rates 2023
If taxable Income Is The Tax Due is
$0 – $11,000 10% of taxable income
$11,000 – $44,725 $1,100 + 12% of the amount over $11,000
$44,725-$95,375 $5,147 + 22% of the amount over $44,725
$95,375 – $182,100 $16,290 + 24% of the amount over $95,375
$182,100 – $231,250 $37,104 + 32% of the amount over $182,100
$231,250 – $578,125 $52,832 + 35% of the amount over $231,250
over $578,125 $174,238.25 + 37% of the amount over $578,125
Married Filing Separately Tax Rates 2023
If taxable Income Is The Tax Due is
$0 – $11,000 10% of taxable income
$11,000 – $44,725 $1,100 + 12% of the amount over $11,000
$44,725-$95,375 $5,147 + 22% of the amount over $44,725
$95,375 – $182,100 $16,290 + 24% of the amount over $95,375
$182,100 – $231,250 $37,104 + 32% of the amount over $182,100
$231,250 – $346,875 $52,832 + 35% of the amount over $231,250
over $346,875 $93,300.75 + 37% of the amount over $346,875
Trusts & Estates Tax Rates 2023
If taxable Income Is The Tax Due is
$0 – $2,900 10% of taxable income
$2,900 – $10,550 $290 + 24% of the amount over $2,900
$10,550-$14,450 $2,126 + 35% of the amount over $10,550
over $14,450 $3,491 + 37% of the amount over $14,450
If you need any additional information in regard to the 2023 IRS inflation adjustments, please contact Joseph A. Bellinghieri, Esquire at 610-840-0239 or via email at [email protected].
