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2023 Tax Updates

2023 Tax Updates

January 30, 2024

The IRS started accepting returns this week, and while Congress didn't pass any major reforms last year, some tax provisions have been updated for the 2023 tax year that could affect how much money you keep and how much goes to Uncle Sam.  In this post, I’ve included some of the most significant changes for investors and retirees.

As an important reminder before we get into the nitty gritty, if you are looking to lower your taxable income and keep more of your hard earned money, you can still make a 2023 contribution to an IRA or SEP retirement account up until the tax filing deadline!

Important Updates for the 2023 Tax Year 

Changes to the Filing Deadline

After two straight years with an April 18 deadline, this year returns to the more traditional April 15 deadline.1  (Remember, though, that filing earlier is almost always better than filing later.  We’ll get you your tax documents as soon as they become available.)

For those who need to file for an extension, the due date is October 15.1   

Changes to Federal Tax Brackets2

As it often does, the IRS has adjusted the 2023 tax brackets based on inflation.  These adjustments are even greater than usual this year as the country continues to contend with higher-than-normal prices.  While tax rates have not changed, bracket ranges increased by roughly 7%.  That’s good news for those whose wages have gone up to keep pace with the rise in prices, because it means they won’t necessarily get bumped into a higher bracket.  And some people may even find themselves dropping down a level, even if their pay stayed the same.   

The brackets for the 2023 tax year are as follows:

Tax Rate

Single

Married, filing jointly

Head of Household

10%

0 to $11,000

0 to $22,000

0 to $15,700

12%

$11,001 to $44,725

$22,001 to $89,450

$15,701 to $59,850

22%

$44,726 to $95,375

$89,451 to $190,750

$59,851 to $95,350

24%

$95,376 to $182,100

$190,751 to $364,200

$95,351 to $182,100

32%

$182,101 to $231,250

$364,201 to $462,500

$182,101 to $231,250

35%

$231,251 to $578,125

$462,501 to $693,750

$231,251 to $578,100

37%

$578,126 and up

$693,751 and up

$578,101 and up

Changes to Capital Gains3

The income threshold for long-term capital gains rates has also gone up. 

Tax Rate

Single

Married, filing jointly

Head of Household

0%

0 to $44,625

0 to $89,250

0 to $59,750

15%

$44,626 to $492,300

$$89,251 to $553,850

$59,751 to $523,050

20%

$492,301 and up

$553,851 and up

$523,051 and up

Changes to Deductions

As you know, when you file your taxes, you can either claim a standard deduction or dive into the details and itemize your deductions.  (Since the passing of the Tax Cuts and Jobs Act back in 2017, most people choose the former.)  Per the IRS, the standard deduction is “a specific dollar amount that reduces the amount of income on which you’ve been taxed.”4

Due to inflation, the IRS has also increased the standard deduction for your 2023 taxes.  For singles, the standard deduction is now $13,850, up from $12,950.  For married couples filing jointly, it is $27,700 up from $25,900.  For heads of households, the standard deduction is $20,800, up from $19,400.5

Remember, you can’t take the standard deduction if you also itemize deductions.  And for married couples filing separately, both spouses must take the same type of deduction. So, if one spouse chooses to itemize, the other spouse must as well.


I hope you found this information helpful.  Obviously, it’s not a completely exhaustive list of every change for the 2023 tax year.  But it is an overview of some of the most important ones.  If you have any questions or concerns, please let me know.  Our door is always open!     

And one last thing - To help reduce the stress of tax season, feel free to have your accountant or tax preparer contact us directly for any needed investment information.  We are always happy to coordinate with other professionals you work with to minimize your workload. 

Have a great month!         

Sources

1 “2024 tax filing season set for January 29,” Internal Revenue Service, https://www.irs.gov/newsroom/2024-tax-filing-season-set-for-january-29-irs-continues-to-make-improvements-to-help-taxpayers

2 “2023 Tax Rate Schedules,” Internal Revenue Service, https://www.irs.gov/publications/p17#d0e50213

3 “Capital gains and losses,” Internal Revenue Service, https://www.irs.gov/taxtopics/tc409

4 “Standard Deduction,” Internal Revenue Service, https://www.irs.gov/taxtopics/tc551

5 “IRS provides tax inflation adjustment for tax year 2023,” Internal Revenue Service, https://www.irs.gov/newsroom/irs-provides-tax-inflation-adjustments-for-tax-year-2023