Citing inflation, IRS announces changes for 2023 tax year
Some U.S. citizens could see lower tax bills when filing forms for the 2023 tax year, after the Internal Revenue Service (IRS) decided to raise brackets due to inflation.
According to the IRS, inflation adjustments are being made for more than 60 tax provisions, including tax rate schedules. The IRS also announced energy-related tax break changes for the 2023 tax year.
Deductions have increased by the following, according to the agency:
- Married couples increased by $1,800 to $27,700.
- Single and married couples filing individually increases by $900 to $13,850.
- Head of households increases by $1,400 to $20,800.
In addition, the marginal rates for the 2023 tax year will stay at 37% for single taxpayers with incomes more than $578,125 and $693,750 for married couples who file jointly. That rate was previously applied to filers who made $539,900 or couples who made $647,850.
The IRS also says the maximum Earned Income Tax Credit for qualifying filers who have at least three or more qualifying children is now $7,430, an increase from the 2022 tax year number of $6,935.
There will also be an increase in the transportation fringe benefit and the monthly limit for qualified parking. That will now be $300, an increase of $20.
IRS officials also announced gift exclusions will be increased from $16,000 to $17,000 for the 2023 calendar year.
According to the IRS, there will also be changes for those who have a Medical Savings Account for the 2023 tax year. Those are the following:
- Self-only coverage: the plan must have an annual deductible that isn’t less than $2,650 but not more than $3,950. The maximum out-of-pocket expense amount will be $5,300.
- Family coverage: the annual deductible can’t be less than $5,300 but can’t be more than $7,900. Meanwhile, the out-of-pocket expense will be limited to $9,650 for the 2023 tax year.
CLICK HERE to read more about the changes.
ABC News contributed to this report.