The Internal Revenue Service (IRS) has announced the new income tax brackets for the 2023 tax year. The new tax brackets will be adjusted for inflation and will go into effect on January 1, 2023. For most taxpayers, this will mean a slight increase in their taxes. Here are the new income tax brackets for 2023:
Marginal Rates: For the 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).
The lowest rate is 10% for the incomes of single individuals with incomes of $11,000 or less ($22,000 for married couples filing jointly).
The standard deduction for married couples filing jointly for the 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 the tax year 2023, up $1,400 from the amount for the tax year 2022.
The IRS increased the figures for a number of provisions, including the alternative minimum tax, the estate tax exemption, and the earned income tax credit. The alternative minimum tax is a parallel system for higher earners, and the estate tax exemption is the amount that can be passed on to heirs without being taxed. The earned income tax credit is a write-off for low- to moderate-income filers. Employees can now funnel $3,050 into health flexible spending accounts.
