The Internal Revenue Service has announced higher federal income tax brackets and deductions for 2023. This will be applied to the tax year of 2023 and returns filed in 2024. There are more than 60 adjustments, and you can get the full document from the IRS website.

The tables below show how much you will owe on your federal taxes on your taxable income. These are both for individuals (Table 1) and those who are married and filing jointly (Table 2):

Table 1.  Marginal Tax brackets for single individuals 2023.

Taxable income

            Taxes owed

$11,000 or less

10% of taxable income

$11,001 – $44,725

$1,100 + 12% above $11,000

$44,726 – $95,375

$5,147 + 22% above $44,725

$95,376 – $182,100

$16,290 + 24% above $95,375

$182,101 – $231,250

$37,104 + 32% above $182,100

$231,251 – $578,125

$52,832 + 35% of above $231,250

$578,126 or more

$174,238.25 + 37% above $578,125

Table 2. Marginal Tax brackets for married filing jointly 2023                 

Taxable income

            Taxes owed

$22,000 or less

10% of taxable income

$22,001 – $89,450

$2,200 + 12% above $22,000

$89,451 – $190,750

$10,294 + 22% above $89,450

$190,751 – $364,200

$32,580 + 24% above $190,750

$364,201 – $462,500

$74,208 + 32% above $364,200

$462,501 – $693,750

$105,664 + 35% above $462,500

$693,751 or more

$186,601.50 + 37% above $693,750

Table 3. The standard deduction has also been increased:

Amount

Increase From 2022

Married couples filing jointly

$27,700

$1,800 

Single taxpayers

$13,850

$900

Married individuals filing separately

$13,850

$900

Heads of households       

$20,800

$1,400

Other provision changes in this announcement last week include:

  • Increase in the Alternative Minimum Tax exemption
  • The maximum for Earned Income Tax Credit for three or more children is now $7,430 from $6,935, up by $495.
  • Foreign earned income exclusion is now $120,00 from $112,000.
  • Annual exclusion for gifts changed to $17,000 from $16,000.
  • Changes to the Medical Savings Account deductible amount.
  • A $20 increase in the monthly limitation for qualified parking and transportation fringe.

Some provisions will not change due to the Tax Cuts and Jobs Act, such as itemized deductions and personal exemptions.

These are the highlights of the adjustments for tax inflation implemented by the IRS for the tax year 2023. The 28-page document can be downloaded from the IRS website to get a complete review of all the changes. Of course, you can also reach out to Peter Witts CPA PC for help with your taxes. Our CPAs can assist you in navigating all these new changes so you can file correctly.