Hey
Inflation rose from 1.4% in January 2021 to the current 8.3%, throwing many of you into an economic dilemma.
However, the IRS adjusts tax brackets annually to cater to inflation-related income increases, including wage
increases. This annual practice is meant to avoid “bracket creep”, where you may end up paying more taxes because of an increase in income.
But inflation could have already affected this increase, calling for IRS protection as explained above.
How are 2023 adjustments likely to be?
This year, many taxpayers could be affected by the bracket creep because these adjustments were announced last year when inflation was under 7% and the Fed was optimistic it would come down.
Since it has remained stubborn, we are likely to hear the IRS soon announce bigger adjustments to our tax brackets.
What’s the good news?
The good news you should take advantage of is the adjustments to retirement accounts that also come with these
announcements.
We are likely to see retirement account contributions increased by
a more than normal margin, opening an avenue for you to aggressively contribute toward your retirement.
However, this works well if you properly plan it. This is, therefore, my call for you to start making plans for next year. Set a monthly contribution target and get ready to max all your retirement accounts.
Remember, life is more fun after retirement when you have enough money to spend.
Do you need any help to strategize your retirement contributions, even for this year? Contact me through this link or call my office at (202)-618-1297. I will also help you with any burning tax issues.
