Tax Rate Changes for 2023

Who is affected: Everyone that pays Federal income tax

We are all feeling the effects of rising prices, but those increases could make filing taxes a little less painful in the future. The effect of inflation has prompted the IRS to raise thresholds for income tax brackets for tax year 2023. While such adjustments take place annually under a formula set by Congress, this year’s unusually large increases is welcome news to anyone whose income have not kept up with significant price increases over the last year. Standard deductions for all filing statuses are also getting a boost (these let workers reduce their yearly earnings by a preset amount before tax is calculated). The upshot: Many households could see a smaller tax bill in spring 2024. There are not any special steps to take advantage of the new tax brackets. They which will apply automatically when your taxes are completed There are other recent inflation-related moves of which you can take advantage, such as the recent increases to retirement plan contribution limits.