13 New Tax Numbers to Know for 2023

2. Estate Tax Exclusion

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.

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3. Cafeteria Plans

The maximum salary reduction for contributions to a health flexible spending arrangement is $3,050 for tax year 2023, up from $2,850 for 2022.

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4. Cafeteria Plan Unused Amount Carryover Maximum

For 2023, if the cafeteria plan permits the carryover of unused amounts, the maximum carryover amount is $610, up from $570 in 2022.

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5. Medical Savings Account

This is a type of account available to participants in certain high-deductible Medicare plans. For participants who have self-only coverage in tax year 2023, the plan must have an annual deductible that is not less than $2,650, up $200 from tax year 2022; but not more than $3,950, an increase of $250 from tax year 2022.

For self-only coverage, the maximum out-of-pocket expense amount is $5,300, up $350 from 2022. For tax year 2023, for family coverage, the annual deductible is not less than $5,300, up from $4,950 for 2022; however, the deductible cannot be more than $7,900, up $500 from the limit for tax year 2022.

For family coverage, the out-of-pocket expense limit is $9,650 for tax year 2023, an increase of $600 from tax year 2022.

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6. Qualified Small Employer Health Reimbursement Arrangement

For taxable years beginning in 2023, to qualify as a qualified small employer health reimbursement arrangement, the arrangement must provide that the total amount of payments and reimbursements for any year cannot exceed $5,850 ($11,800 for family coverage). That's up from $5,450, or $11,050 for family coverage, in 2022.

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7. Earned Income Credit

The tax year 2023 maximum Earned Income Tax Credit amount is $7,430 for qualifying taxpayers who have three or more qualifying children, up from $6,935 for tax year 2022. The revenue procedure contains a table providing maximum EITC amount for other categories, income thresholds and phase-outs.

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8. Alternative Minimum Tax Exemption

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).

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9. Eligible Long-Term Care Premiums

Clients who have high enough medical bills to benefit from itemizing their medical expenses can include at least some of their private long-term care insurance premiums in their medical expense total.

The amounts that can be included in the medial expense total vary by age.

Here’s how the 2023 “includible” premium levels compare with the 2022 levels:

• 40 or under: will increase to $480, from $450.
• More than 40 and up to 50: will increase to $890, from $850.
• More than 50 and up to 60: will increase to $1,790, from $1,690.
• More than 60 and up to 70: will increase to $4,770, from $4,510.
• 70 and older: will increase to $5,960, from $5,640.

For the Qualified Long-Term Care Insurance Contract or Life Insurance Contract Per Diem Limitation, the dollar limit on the benefits will increase to $420 per day, from $390 per day.

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10. Itemized Deductions

For 2023, there is no limitation on itemized deductions, as that limitation was eliminated by the Tax Cuts and Jobs Act, beginning in 2018.

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11. Tax 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:

• 35% for incomes over $231,250 ($462,500 for married couples filing jointly);
• 32% for incomes over $182,100 ($364,200 for married couples filing jointly);
• 24% for incomes over $95,375 ($190,750 for married couples filing jointly);
• 22% for incomes over $44,725 ($89,450 for married couples filing jointly);
• 12% for incomes over $11,000 ($22,000 for married couples filing jointly).
• 10% for incomes of $11,000 or less ($22,000 for married couples filing jointly).

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12. Personal Exemption

The personal exemption for tax year 2023 remains at zero, as it was for 2022, as it was eliminated in the Tax Cuts and Jobs Act.

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13. Standard Deduction

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.

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