“2023 Income Tax Changes You Need to Know”
As we move into a new tax year, there are a few changes to the income tax rules that could impact you. Here’s what you need to know:
Standard Deduction: The standard deduction for 2023 has increased to $12,950 for individuals and $25,900 for married couples filing jointly. This means that you can reduce your taxable income by this amount without having to itemize deductions.
Tax Rates: The tax rates for 2023 have been adjusted for inflation. The new tax brackets are as follows:
10% for income up to $10,650
12% for income between $10,651 and $43,550
22% for income between $43,551 and $117,950
24% for income between $117,951 and $191,650
32% for income between $191,651 and $416,700
35% for income between $416,701 and $418,400
37% for income above $418,400
Retirement Contributions: The contribution limits for 401(k) plans, 403(b) plans, and most 457 plans have increased to $20,500 for 2023. The catch-up contribution limit for those age 50 and older remains at $6,500.
Child Tax Credit: The child tax credit has been expanded for 2023, with a maximum credit of $3,000 per child under age 18. The credit is also available for children aged 18-24 who are enrolled in college full-time.
Health Savings Accounts: The contribution limit for Health Savings Accounts (HSAs) has increased to $3,700 for individuals and $7,450 for families. Those aged 55 or older can contribute an additional $1,000.
It’s important to stay up-to-date with these income tax changes to ensure that you’re taking advantage of all available deductions and credits. Consider consulting with a tax professional to ensure that you’re maximizing your tax savings for the year 2023.