James Contini: IRS updates income limits for 2023

James F. Contini II
·2 min read
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Jim Contini
Jim Contini

The IRS has announced a number of changes to various tax matters for 2023. These tax matters have been adjusted for inflation, and since there has been a significant amount of inflation this past year, these items have increased, significantly in some cases.

The lowest income tax rate for 2023 is 10% and will apply to taxpayers with incomes up to $11,000 (2022 was $10,275) for an individual and $22,000 (2022 was $20,550) for a couple filing jointly.

The next bracket is the 12% bracket and will apply to taxpayers with incomes up to $44,275 (2022 was $41,775) for an individual and $89,450 (2022 was $83,550) for a couple filing jointly.

The next bracket is 22% and will apply to taxpayers with incomes up to $95,375 (2022 was $89,075) for an individual and $190,750 (2022 was $178,150) for a couple filing jointly.

The next bracket is 24% and will apply to taxpayers with incomes up to $182,100 (2022 was $170,050) for an individual and $364,200 (2022 was $340,100) for a couple filing jointly.

The next bracket is 32% and will apply to taxpayers with incomes up to $231,250 (2022 was $215,950) for an individual and $462,500 (2022 was $431,900) for a couple filing jointly.

The next bracket is 35% and will apply to taxpayers with incomes up to $578,125 (2022 was $539,900) for an individual and $693,750 (2022 was $647,850) for a couple filing jointly.

The 2023 top income tax rate is still 37%.  The income tax rate will apply to single taxpayers with incomes over 578,125 (2022 was 539,900) and joint filers with income over $693,750 for individuals filing jointly and that number is up significantly from the 2022 ($647,850).

Here are some other tax changes for 2023:

  1. The FICA tax will be applicable to earnings up to $160,200. The amount previously was $147,000.

  2. The federal estate tax exemption will increase to $12,920,000 in 2023. In 2022, that exemption is $12,060,000.

  3. The gift tax annual exclusion will increase from $16,000 to $17,000 in 2023.

  4. The standard deduction will increase to $27,700 for a couples filing jointly which is an increase of $1,800 from 2022. For taxpayers filing individually, the increase will be $900 to $13,850.

Please make sure that you speak with your estate planning attorney and tax preparer regarding these various matters for 2023.

NOTE: This general summary of the law should not be used to solve individual problems since slight changes in the fact situation may require a material variance in the applicable legal advice.

James F. Contini II is a certified specialist in estate planning with Krugliak, Wilkins, Griffiths & Dougherty Co., LPA in New Philadelphia. Reach him at jcontini@kwgd.com.

This article originally appeared on The Times-Reporter: James Contini: IRS updates income limits for 2023