IRS Announces Adjustments to Tax Brackets, Standard Deduction, and More for 2023
Significant Changes Aim to Keep Pace with Inflation
The Internal Revenue Service (IRS) has released the annual inflation adjustments for the 2023 tax year, affecting tax brackets, the standard deduction, and various tax deductions and credits.
Tax Brackets
To account for inflation, the IRS has widened the income ranges for each tax bracket. This means that taxpayers will pay less in taxes on the same amount of income as in 2022.
For example, the 10% tax bracket now applies to incomes up to $10,275 for single filers and $20,550 for married couples filing jointly, an increase from $9,950 and $19,900 in 2022.
Standard Deduction
The standard deduction, which reduces taxable income before applying tax rates, has also increased.
For 2023, the standard deduction is $13,850 for single filers, up from $12,950 in 2022. Married couples filing jointly will see their standard deduction increase to $27,700, compared to $25,900 previously.
Tax Deductions and Credits
Several tax deductions and credits have also been adjusted for inflation, providing additional tax savings for individuals and businesses.
The earned income tax credit, which provides a tax break for low- and moderate-income workers, has increased for 2023.
Additionally, the child tax credit has been extended for one year, with a maximum credit of $2,000 per qualifying child.
Impact on Taxpayers
These adjustments are designed to help taxpayers keep more of their hard-earned money and offset the impact of inflation on their finances.
The IRS encourages taxpayers to review the updated tax brackets and deductions to ensure accurate tax planning and filing.
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