LUTZ BUSINESS INSIGHTS
irs tax inflation adjustments for tax year 2023
daniel sweeney, tax director
On October 18, 2022, the IRS announced the tax year 2023 annual inflation adjustments for more than 60 tax provisions, including tax rate schedules and standard deduction rates. US tax rates are adjusted for inflation annually. The increase is particularly generous due to this year’s high inflation.
In addition to the release by the IRS, the US Social Security Administration (SSA) announced on October 13, 2022, the maximum amount of wages subject to Social Security will increase from $147,000 in 2022 to $160,200 in 2023. The 9% increase in the Social Security wage base from 2022 to 2023 represents the largest percentage annual increase to the Social Security wage base since 1983.
While these adjustments won’t apply until the 2023 tax year (for returns generally filed in 2024), understanding these changes can help individuals with personal, business, and investment strategies. Below are highlights of the key tax adjustments:
Marginal Rates – Single and (Married Filing Joint (MFJ))
- 37% for income greater than $578,125 ($693,750 for MFJ)
- 35% for incomes over $231,250 ($462,500 for MFJ)
- 32% for incomes over $182,100 ($364,200 for MFJ)
- 24% for incomes over $95,375 ($190,750 for MFJ)
- 22% for incomes over $44,725 ($89,450 for MFJ)
- 12% for incomes over $11,000 ($22,000 for MFJ)
- $27,700 – Married Filing Joint and surviving spouse (up $1,800 from the prior year)
- $13,850 – Single and Married Filing Single (up $900 from the prior year)
- $20,800 – Head of household (up $1,400 from the prior year)
Estate/ Gift Thresholds
- The annual exclusion for gifts increases from $16,000 to $17,000.
- The basic estate tax exclusion for inheritances increases from $12,060,000 to $12,920,000.
- The monthly limitation for the qualified transportation fringe benefit and the monthly limitation for qualified parking increases from $280 to $300.
- For Health Savings Accounts (HSAs), the contribution limit for self-only coverage increases to $3,850, and Family Coverage increases to $7,750.
If you have any questions, please contact us or your Lutz representative.
12.13.22 | YEAR-END TAX UPDATE | WEBINAR
Though there aren’t many days left in 2022, you still have time for a quick review of your financial situation. In this presentation, Lutz experts will cover current tax law updates, as well as general year-end planning ideas.
- Up-to-Date Tax Law Changes
- Tax Planning Opportunities
- New Green Energy Tax Credits
ABOUT THE AUTHOR
DANIEL SWEENEY + TAX DIRECTOR
Daniel Sweeney is a Tax Director at Lutz with over five years of experience in taxation. He focuses on several areas, including tax preparation and planning for individuals, businesses, and estates and trusts. His experience also includes international tax and tax research.
AREAS OF FOCUS
- Individual, Partnership, & Corporate Taxation
- Trust & Estate Taxation
- International Taxation
- Tax Research
AFFILIATIONS AND CREDENTIALS
- Nebraska State Bar Association, Member
- Hastings Young Professionals, Member
- Nebraska State Bar
- BA in Political Science, American University, Washington, D.C.
- JD, University of Nebraska Lincoln College of Law, Lincoln, NE
- LLM Tax, Northwestern Pritzker School of Law, Chicago, IL
- Hastings College Adjunct Professor of Federal Income Tax
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