IRS Announces Tax Inflation Adjustments for 2023

The agency has adjusted thresholds for tax brackets, the AMT, the estate tax and other provisions.

The Internal Revenue Service announced Tuesday inflation adjustments for more than 60 tax provisions for tax year 2023.

Revenue Procedure 2022-38 sets out the tax year 2023 adjustments, which generally apply to tax returns filed in 2024.

The standard deduction for married couples filing jointly for tax year 2023 rises to $27,700, up $1,800 from the prior year.

For single taxpayers and married individuals filing separately, the standard deduction rises to $13,850 for 2023, up $900, and for heads of households, the standard deduction will be $20,800 for tax year 2023, up $1,400 from the amount for tax year 2022.

As to marginal rates, for tax year 2023, the top tax rate remains 37% for individual single taxpayers with incomes greater than $578,125 ($693,750 for married couples filing jointly).

The other rates are:

The lowest rate is 10% for incomes of single individuals with incomes of $11,000 or less ($22,000 for married couples filing jointly).

For the Alternative Minimum Tax, the exemption amount for tax year 2023 is $81,300 and begins to phase out at $578,150 ($126,500 for married couples filing jointly for whom the exemption begins to phase out at $1,156,300).

The 2022 exemption amount was $75,900 and began to phase out at $539,900 ($118,100 for married couples filing jointly for whom the exemption began to phase out at $1,079,800).

Estates of decedents who die during 2023 have a basic exclusion amount of $12.9 million up from a total of just over $12 million for estates of decedents who died in 2022.

The annual exclusion for gifts increases to $17,000 for calendar year 2023, up from $16,000 for calendar year 2021.

Also, the maximum credit allowed for adoptions for tax year 2023 is the amount of qualified adoption expenses up to $15,950, up from $14,890 for 2022.

(Image: Shutterstock)

Recommended Stories