Tax News
2023 Tax News
Discover the latest tax news changes for 2023 and stay ahead of the game! Our comprehensive coverage includes all the information you need to know about the upcoming tax season, highlighting key updates that could impact your business or personal finances. From new regulations to deductions and credits, we’ve got you covered. Don’t miss out on this critical information – read up on the latest tax news changes today!
Taxable income brackets
| Tax rate | Single filers | Married couples filing jointly (and qualifying widows or widowers) |
|---|---|---|
| 10% | $0 to $11,000 | $0 to $22,000 |
| 12% | $11,001 to $41,725 | $20,001 to $89,450 |
| 22% | $44,726 to $95,375 | $89,451 to $190,750 |
| 24% | $95,376 to $182,100 | $190,751 to $364,200 |
| 32% | $182,101 to $231,250 | $364,201 to $462,500 |
| 35% | $231,251 to $578,125 | $462,501 to $693,750 |
| 37% | $578,126 or more | $693,751 or more |
Standard Deduction Increase for Tax Year 2023
After considering inflation, the IRS has announced an increase in the standard deduction for tax year 2023. Single filers and married couples filing separately can now claim a standard deduction of $13,850, while single heads of household, who are typically unmarried with one or more dependents, can claim $20,800. If you’re married and filing jointly, you can now claim a standard deduction of $27,700. Make sure to take advantage of this increase to reduce your taxable income and potentially lower your tax liability.
Itemized deductions have not changed much for 2023
Although most filers tend to take the higher standard deduction for practical reasons, itemizing might still benefit you if you have enough tax-deductible expenses. Here are some rules for itemized deductions:
– State and local taxes: You can only deduct up to $10,000 for state and local income, property, and real estate taxes.
– Mortgage interest deduction: You can only deduct mortgage interest up to $750,000 of indebtedness, unless you had $1,000,000 of home mortgage debt before December 16, 2017.
– Medical expenses: You can only deduct medical expenses that exceed 7.5% of adjusted gross income (AGI).
– Charitable donations: For gifts to public charities, the annual income tax deduction limits are 30% of AGI for contributions of non-cash assets and 60% of AGI for contributions of cash. If you give both cash and non-cash assets, the overall limit is generally 50% of AGI.
– Miscellaneous deductions: No miscellaneous itemized deductions are allowed.
Maximize your retirement savings with increased IRA and 401(k) limits
Are you taking advantage of the slightly raised 2023 contribution limits for traditional and Roth IRAs? You can now contribute up to $6,500 with an additional $1,000 catch-up contribution if you’re ages 50 and older. Not only that, but the contribution limits for tax-deferred and Roth 401(k)s have also increased to $22,500 for this year. If you’re ages 50 or older, you can make an additional $7,500 catch-up contribution.
Don’t miss out on the opportunity to maximize your contributions and potentially receive a tax deduction. Invest in your future by taking advantage of these increased limits.
Save more in your health savings account (HSA)
Saving money is always a good idea, and when it comes to your 2023 health savings account (HSA), it’s truly a win-win situation. By maxing out your contributions each year, you’ll not only save on taxes, but also build up a healthy cushion for medical expenses down the road.
But how to maximize your contributions? One tip is to plan ahead and adjust your budget accordingly. Take advantage of employer contributions and automatic payroll deductions, and explore investment options to make your funds work harder for you.
Another way to save more is by taking advantage of eligible medical expenses. By keeping careful records, you can identify and claim various out-of-pocket costs, such as certain treatments, therapies, and prescription drugs.
In 2023, the maximum contribution to an HSA is $3,850 for an individual (up $50 from 2021) and $7,750 for a family (up $100). For those, 55 and older you can contribute an extra $1,000 catch-up contribution.
To qualify for an HSA, you must be enrolled in a high-deductible health plan (which usually has lower premiums as well).
Don’t forget to educate yourself on the latest changes and regulations related to HSAs, and to seek the advice of a qualified financial professional if needed. With a little effort and foresight, you can make your HSA a key tool in your financial planning toolkit.
Important Changes to the 2023 Child Tax Credit
Tax credits are a great way to reduce the amount of taxes you owe, and the Child Tax Credit is no exception. In 2023, you’ll be pleased to know that you can claim $2,000 per child under the age of 17. However, keep in mind that there is a phase-out for the credit that starts at $400,000 for joint filers and $200,000 for single filers. Additionally, for any other qualified dependents, you can claim a $500 credit. Make sure you stay up-to-date on these changes and take advantage of any tax credits that are available to you!
2023 Alternative minimum tax (AMT) exemption is higher
In 2023, high-income households will still be affected by the Alternative Minimum Tax (AMT), but they will get a higher exemption of $81,300 for single filers and $126,500 for married taxpayers filing jointly. Married taxpayers filing a joint return with an income of $1,156,300 or more and all other taxpayers with an income of $578,150 or more will have their AMT exemption phased out at a rate of 25 cents for every dollar over the threshold.
2023 estate tax exemption is even higher, but potentially short-lived
The estate and gift tax exemption, which is indexed to inflation, rose to $12,920,000 for 2023. This increase in the exemption provides an opportunity for families to pass on more wealth tax-free, but it’s important to remember that this change is set to expire at the end of 2025. This means that without Congressional action, the exemption could be cut in half, potentially reducing the amount of wealth that families can pass on to their loved ones. It’s crucial to stay informed and plan accordingly. The annual gift exclusion has also increased to $17,000 per recipient, giving you more room to give money to your loved ones without incurring any tax liability or using up your lifetime estate and gift tax exemption. Plan strategically to take advantage of this change and ensure your financial well-being for years to come.2022 Tax News
Child Tax Credit
- For tax years 2022-2025, the credit reverts back to $2,000.
- Dependent children must be under 17.
- The credit is no longer refundable.
- Single and Head of Household taxpayers may earn up to $200,000 to get the credit.
- Married couples filing jointly may earn up to $400,000.
Child and Dependent Care Credit
- The credit reverts to 35% of $3,000 ($1,050) for childcare expenses for dependent children under 13, an incapacitated spouse or parent or another dependent, so that you can work or look for work.
- For two or more dependents, the credit will be 35% of $6,000 in expenses ($2,100).
- The credit is reduced at incomes over $15,000.
Earned Income Tax Credit
- The age requirement reverts back. If you do not have children, you have to be between 25 and under 65 to claim the credit.
- You cannot use prior year’s income to qualify for the credit.
- The credit is adjusted up for each inflation yearly.
Recovery Rebate Credit
- You cannot claim the credit on your 2022 taxes.
- You may claim it on your 2021 taxes.
Other Changes
- Self-Employed Sick and Family Leave Credits expired in 2021.
- You may no longer claim the deduction for cash donations if you claim the standard deduction.