IRS Income Tax Brackets AND Standard Deductions Increased for 2023 | News or Noise

October 26, 2022

IRS Announcement:

Similar to the news released two weeks ago on Social Security benefits for 2023, because of the highest inflation rates in years, last week, the IRS announced higher federal income tax brackets and standard deductions for 2023.

I’m Chris Perras, Chief Investment Officer with Oak Harvest Financial Group, and this is our investment team’s mid-week release when we examine a news item, headline, or story making the rounds from publicly available sources and ask, “Is it News or Noise?” for your money. Before we discuss last week’s announcement by the IRS of new income tax brackets for 2023, please take a moment to click on the subscribe button and click on the notification bell so you will be alerted when our team uploads our latest content.

Because of higher inflation in 2022, the IRS has boosted the income thresholds of each tax bracket for next year, applying to tax the year 2023 for returns filed in 2024. The standard deduction will increase to $27,700 for married couples filing jointly and $13,850 for single taxpayers.

Take a look at the marginal brackets chart of “married filing jointly” for the tax year of 2023:

  • Understanding how much you’ll be taxed according to what status you file might help you start thinking about a tax strategy, especially when considering Roth Conversions.

And now, take a look at the marginal brackets chart of “single” tax filers for the tax year of 2023:

  • Marginal tax brackets for tax year 2023, single individuals.

Remember, everyone, these are marginal tax brackets. This means for every dollar you make in a certain range or bracket, you are paying a different tax rate. So the overall tax rate you see at the end of the year, on your total taxable income, is a weighted average rate.

Most of the time, the overall percentage you pay will be much lower than the highest bracket you fall into. This is most often the case for everyone EXCEPT the highest wage earners out there.

In addition to raising the bracket ranges, the IRS also will increase the standard deduction, for those who don’t itemize in 2023.

For married couples filing jointly, the standard deduction will rise to $27,700, up from $25,900 in 2022. Single filers may claim a standard deduction of $13,850 in 2023, an increase from $12,950.

The Verdict:

The IRS also changed many other rates, including the alternative minimum tax and the estate tax exemption for wealthy families. Go to IRS.GOV.

We’ll have a link in the description if you want all the details: https://www.irs.gov/pub/irs-drop/rp-22-38.pdf

This is certainly news for you, your family, and your money.

Are you trying to meet your needs or your greed in retirement? Give us a call here and schedule an initial consultation with an Oak Harvest Advisor. We will sit down with you and help you and your family do the math to figure out if you will be able to meet your retirement goals and needs.

At Oak harvest, we think our clients are best served by us helping them plan for their future needs instead of focusing on the past. The future is always uncertain, and that’s why our advisors and retirement planning teams plan for your retirement needs first and your greed second.

Give us a call to speak to an advisor, and let us help you craft a financial plan that helps you meet your retirement goals. Call us here at (877) 896-0040, and schedule an advisor consultation. We are here to help you on your financial journey into and through your retirement years.

-I’m Chris Perras and from everyone here at Oak Harvest, have a blessed week.