Every year, the Internal Revenue Service announces new tax brackets among other crucial credits and deductions that determine your tax rate for the upcoming year. However, the changes do not account for increased wages, which means that if you got a raise to keep up with inflation, you'll likely face the same tax rate as the prior year, all else equal. If your salary rose by more than the rate of inflation, you may fall under a higher tax bracket. But if your wages didn't keep up with inflation, you could end up in a lower tax bracket compared to 2021. The following tables present various tax facts adjusted for 2023 that you might be subject to.
Federal Income Tax Brackets and Rates for Single Filers, Married Couples Filing Jointly, and Heads of Households
In 2023, the income limits for all tax brackets and all filers will be adjusted for inflation and will be as follows. There are seven federal income tax rates in 2023: 10 percent, 12 percent, 22 percent, 24 percent, 32 percent, 35 percent, and 37 percent.
Capital Gains Tax Rates and Brackets
Long-term capital gains are taxed using different brackets and rates than ordinary income.
Standard Deduction
The standard deduction will increase by $900 for single filers and by $1,800 for joint filers.
Annual Exclusion for Gifts
In 2023, the first $17,000 of gifts to any person are excluded from tax, up from $16,000. The exclusion is increased to $175,000 from $164,000 for gifts to spouses who are not citizens of the United States.
Source: (1) https://taxfoundation.org/2023-tax-brackets/
Views expressed are as of the date indicated and are not intended to serve as investment advice, tax advice, a recommendation, offer, or solicitation to buy or sell any securities; they are based on the information available at the time and are subject to change based on economic, capital market, and other conditions. Any investment decision should be based on an individual’s own goals, time horizon, and tolerance for risk.
Prior performance does not guarantee future results and there is the potential for the loss of your capital investment.
Information and data provided have been obtained from sources deemed reliable but are not guaranteed.
