The IRS adjusted the 2023 federal income tax brackets higher based on inflation. Here's how your federal taxes may compare to 2022.
Steber said you're likely to notice a difference on next year's tax return.
The goal of yearly inflation adjustments is to offset "tax rate bracket creep," he said, which happens when you owe more income taxes after wage increases without economic benefit due to inflation.in the federal income tax brackets from 2022 to 2023, said Kyle Pomerleau, senior fellow and federal tax expert with the American Enterprise Institute.
"That was a larger increase than usual," he said. "And that is because inflation has been higher than usual," explaining that inflation was "very modest" the decade prior to the pandemic.The standard deduction also increased by nearly 7% for 2023, rising to $27,700 for married couples filing jointly, up from $25,900 in 2022. Single filers may claim $13,850, an increase from $12,950.
With roughly 90% of Americans claiming the standard deduction rather than itemized deductions, the change may have a "large impact on taxpayers' bottom line in 2023," Steber said.
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