Tax rates for the Tax Year 2023

In 2023, Tax brackets are a little different than in 2022, and here is how to calculate the tax you owe to Uncle Sam with your Adjusted Gross Income. When tax season comes in 2024 for the tax year of 2023, you will have the same seven federal income tax brackets as the last few seasons: 10%, 12%, 22%, 24%, 32%, 35% and 37%. Your filing status and taxable income, including wages, will determine the bracket you’re in. According to the IRS,

The tax year 2023 adjustments described below generally apply to tax returns filed in 2024.

The tax items for the tax year 2023 of greatest interest to most taxpayers include the following dollar amounts:

The standard deduction for married couples filing jointly for tax year 2023 rises to $27,700 up $1,800 from the prior year. For single taxpayers and married individuals filing separately, the standard deduction rises to $13,850 for 2023, up $900, and for heads of households, the standard deduction will be $20,800 for tax year 2023, up $1,400 from the amount for tax year 2022.

If you are aged over 65 or older, your additional deduction will be $1,500 if Married filing jointly, or separately and if you are blinded then you can add another $1,500 to your standard deduction. If you’re single or file as head of household, the additional standard deduction is $1,850.

Marginal Rates: For tax year 2023, the top tax rate remains 37% for individual single taxpayers with incomes greater than $578,125 ($693,750 for married couples filing jointly).

The other rates are:
35% for incomes over $231,250 ($462,500 for married couples filing jointly);

32% for incomes over $182,100 ($364,200 for married couples filing jointly);

24% for incomes over $95,375 ($190,750 for married couples filing jointly);

22% for incomes over $44,725 ($89,450 for married couples filing jointly);

12% for incomes over $11,000 ($22,000 for married couples filing jointly).
The lowest rate is 10% for incomes of single individuals with incomes of $11,000 or less ($22,000 for married couples filing jointly).

The Alternative Minimum Tax exemption amount for the tax year 2023 is $81,300 and begins to phase out at $578,150 ($126,500 for married couples filing jointly for whom the exemption begins to phase out at $1,156,300). The 2022 exemption amount was $75,900 and began to phase out at $539,900 ($118,100 for married couples filing jointly for whom the exemption began to phase out at $1,079,800).
The tax year 2023 maximum Earned Income Tax Credit amount is $7,430 for qualifying taxpayers who have three or more qualifying children, up from $6,935 for the tax year 2022. The revenue procedure contains a table providing the maximum EITC amount for other categories, income thresholds, and phase-outs.
For tax year 2023, the monthly limitation for the qualified transportation fringe benefit and the monthly limitation for qualified parking increases to $300, up $20 from the limit for 2022.
For the taxable years beginning in 2023, the dollar limitation for employee salary reductions for contributions to health flexible spending arrangements increases to $3,050. For cafeteria plans that permit the carryover of unused amounts, the maximum carryover amount is $610, an increase of $40 from taxable years beginning in 2022.
For the tax year 2023, for participants who have self-only coverage in a Medical Savings Account, the plan must have an annual deductible that is not less than $2,650, but not more than $3,950. For self-only coverage, the maximum out-of-pocket expense amount is $5,300. For tax year 2023, for family coverage, the annual deductible is not less than $5,300, and the deductible cannot be more than $7,900.For family coverage, the maximum out-of-pocket expense limit is $9,650 for the tax year 2023.

For the tax year 2023, the foreign earned income exclusion is $120,000 up from $112,000 for the tax year 2022.
Estates of decedents who die during 2023 have a basic exclusion amount of $12,920,000, up from a total of $12,060,000 for estates of decedents who died in 2022.
The annual exclusion for gifts increases to $17,000 for calendar year 2023, up from $16,000 for calendar year 2022.
The maximum credit allowed for adoptions for tax year 2023 is the amount of qualified adoption expenses up to $15,950, up from $14,890 for 2022

If you are an eligible educator in connection with books, supplies(other than nonathletic supplies for courses of instruction in health or physical education), computer equipment(including related software and services) other equipment, and supplementary materials used by the eligible educator in the classroom is $300.

If you want to get a tax deduction for the year 2023, contribute to the Traditional IRA(if you are over the age of 50, $7,500, and under the age of 50, you can contribute $6,500 to the Traditional IRA ). If you don’t mind getting a tax deduction but still want to save for your retirement, you can contribute to the Roth IRA with the same amount as above.

In addition, If you want to withdraw cash from your bank account or deposit to your bank over $10,000 then you should ask your banker to make sure of the report of the transaction and the information to the IRS as your financial institution. The Bank Secrecy Act requires that banks are required to report these transactions equal to or above $10,000 within 15 days.