IRS Announces New Tax Brackets, Standard Deductions for 2023 Due to Inflation
The IRS is significantly increasing the thresholds for income tax brackets in 2023 to adjust for the record-breaking inflation the U.S. has experienced lately. And that means if your wages haven’t kept up with skyrocketing prices, you may be taxed at a lower rate • Full Story
With inflation rising, the IRS is making changes that could save taxpayers money next year.
“They’re huge tax bracket increases and that’s what was absolutely necessary because as we all know inflation is absolutely out of control,” National Taxpayers Union Executive Vice President Brandon Arnold said.
Arnold says the IRS is pushing up 2023 tax brackets by about 7 percent.
“So this isn’t a tax cut on its own but it will prevent people from paying higher taxes,” Arnold said.
The standard deduction, the portion of your income not subject to tax, is also rising.
“The standard deduction is increasing by about 900 dollars for single filers, 1800 dollars for married filers,” Arnold said.
Alex Durante with Tax Foundation says these increases help avoid the so-called “bracket creep” Americans experienced in the 70s.
“Taxpayers were actually being pushed into the higher brackets even though their real incomes hadn’t risen,” Durante said.
Both Arnold and Durante welcome the updates but say other amounts also need to be changed.
“Unlike a lot of provisions in the tax code, the child tax credit is not indexed for inflation, so it is stuck at the same level it was in 2022,” Arnold said.
“I would certainly push for indexing as much of the tax code as we possibly can,” Durante said.
Taxpayers will see the full effect of these changes when they file their taxes in 2024.
(Pix11)
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