Hey

It is that time of the year again when the IRS adjusts income tax brackets to avoid “bracket creep”, where you may end up paying more taxes because of an increase in income.

Income may increase in line with inflation. For example, your boss may pay you more money as inflation rises, or if you are a business, you may increase your prices due to inflation.

These new tax brackets are meant to protect your additional revenue due to the above. The last thing you want is to be thrown into a higher tax bracket when your actual income or disposable income has not increased.

That is why the RS has released higher federal tax brackets for 2023 to adjust for inflation.

Highlights

• The standard deduction rises to $13,850 for single taxpayers and $27,700 for married couples filing together, from $12,950 and $25,900 respectively.
• The earned income tax credit (EITC) increases to a maximum of $7,430
• Employees can funnel $3,050 into health flexible spending accounts from $2,850
• Limits for 401(k) and individual retirement accounts are yet to be released

What are the new tax brackets?

The table below shows the income brackets for single individuals for the 2023 tax year.

The table below shows the income brackets for married couples filing jointly for the 2023 tax year.

Have you hired a tax pro to prepare your 2022 taxes? If not, contact me to get started. The earlier we start preparing, the more you can save on taxes. Contact me today.

Hey Entrepreneur! I am Folasade Ayegbusi. I am an Enrolled Agent, Accountant, Ex-insurance Broker, Speaker, and Small Business Growth Strategist. Additionally, I am a Mother, and Entrepreneur.

I have helped entrepreneurs and small business owners save over $25 million dollars in lost revenue, tax assessments, penalties, and interests over the last 12 months. I am confident that I can assist you with all of your accounting needs.