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2023 Tax Brackets, Standard Deduction, and Other Changes

The IRS recently published the annual inflation updates for 2023. If you have questions about a particular amount that I do not mention here, you can likely find it in the official IRS announcements:

Single 2023 Tax Brackets

Taxable Income
Tax Bracket:
$0-$11,000 10%
$11,000-$44,725 12%
$44,725-$95,375 22%
$95,375-$182,100 24%
$182,100-$231,250 32%
$231,250-$578,125 35%
$578,125+ 37%

 

Married Filing Jointly 2023 Tax Brackets

Taxable Income
Tax Bracket:
$0-$22,000 10%
$22,000-$89,450 12%
$89,450-$190,750 22%
$190,750-$364,200 24%
$364,200-$462,500 32%
$462,500-$693,750 35%
$693,750+ 37%

 

Head of Household 2023 Tax Brackets

Taxable Income
Tax Bracket:
$0-$15,700 10%
$15,700-$59,850 12%
$59,850-$95,350 22%
$95,350-$182,100 24%
$182,100-$231,250 32%
$231,250-$578,100 35%
$578,100+ 37%

 

Married Filing Separately 2023 Tax Brackets

Taxable Income
Marginal Tax Rate:
$0-$11,000 10%
$11,000-$44,725 12%
$44,725-$95,375 22%
$95,375-$182,100 24%
$182,100-$231,250 32%
$231,250-$346,875 35%
$346,875+ 37%

 

Standard Deduction Amounts

The 2023 standard deduction amounts are as follows:

  • Single or married filing separately: $13,850
  • Married filing jointly: $27,700
  • Head of household: $20,800

The additional standard deduction for people who have reached age 65 (or who are blind) is $1,500 for each married taxpayer or $1,850 for unmarried taxpayers.

IRA Contribution Limits

The contribution limit for Roth IRA and traditional IRA accounts is increased to $6,500.

The catch-up contribution limit for people age 50 or over does not get inflation adjustments and therefore is still $1,000.

401(k), 403(b), 457(b) Contribution Limits

The salary deferral limit for 401(k) and other similar plans is increased to $22,500.

The catch-up contribution limit for 401(k) and other similar plans for people age 50 and over is increased to $7,500.

The maximum possible contribution for defined contribution plans (e.g., for a self-employed person with a sufficiently high income contributing to a solo 401(k)) is increased to $66,000.

Health Savings Account Contribution Limits

For 2023, the maximum HSA contribution for somebody with self-only coverage under a high deductible health plan is $3,850. The limit for somebody with family coverage under such a plan is $7,750.

The HSA catch-up contribution limit for people age 55 and over is not inflation adjusted, so it remains at $1,000.

Capital Gains and Qualified Dividends

For 2023, long-term capital gains and qualified dividends face the following tax rates:

  • 0% tax rate if they fall below $89,250 of taxable income if married filing jointly, $59,750 if head of household, or $44,625 if filing as single or married filing separately.
  • 15% tax rate if they fall above the 0% threshold but below $553,850 if married filing jointly, $523,050 if head of household, $492,300 if single, or $276,900 if married filing separately.
  • 20% tax rate if they fall above the 15% threshold.

Alternative Minimum Tax (AMT)

The AMT exemption amount is increased to:

  • $81,300 for single people and people filing as head of household,
  • $126,500 for married people filing jointly, and
  • $63,250 for married people filing separately.

Annual Gift Tax Exclusion

For 2023 the annual exclusion for gifts will be $17,000.

Estate Tax

The estate tax exclusion is increased to $12,920,000 per decedent.

Pass-Through Business Income

With respect to the 20% deduction for qualified pass-through income, for 2023, the threshold amount at which the “specified service trade or business” phaseout and the wage (or wage+property) limitations begin to kick in will be $364,200 for married taxpayers filing jointly and $182,100 for single taxpayers, people filing as head of household, and for married people filing separately.

For More Information, See My Related Book:

Book3Cover

Taxes Made Simple: Income Taxes Explained in 100 Pages or Less

Topics Covered in the Book:
  • The difference between deductions and credits,
  • Itemized deductions vs. the standard deduction,
  • Several money-saving deductions and credits and how to make sure you qualify for them,
  • Click here to see the full list.

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