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2023 Tax Information

The following are some key points on Federal tax rates and other changes for 2023, as provided by the Wall Street Journal.

Social Security:
It was recently announced that Social Security benefits will increase by 8.7% for 2023!  In addition, Medicare premiums are expected to decrease.

Contribution Limits:
The IRS has released 2023 inflation-adjusted contribution limits, phase-out ranges, and income limits for various retirement accounts.

  • The amount an individual can contribute to a 401(k), 403(b), and most 457 plans will increase to $22,500. If you will turn 50 or older, the limit has increased to $30,000.
  • For IRAs, the amount an individual can contribute increases to $6,500 (up from $6,000 in 2022). The catch-up contribution amount remains $1,000.
  • The income phase-out ranges for Roth IRAs are:
         For singles and heads of household, the phase out begins at $138,000 and ends at $153,000 (up from between $129,000 and $144,000 in 2022)
         For married couples filing jointly, between $218,000 and $228,000 (up from between $204,000 and $214,000 in 2022)
         For married couples filing separately between $0 and $10,000.
    • The amount individuals can contribute to their SIMPLE retirement accounts is increased to $15,500, up from $14,000.
    • The Health Savings Account limits increased to $3,850 for self-only coverage and $7,750 for family coverage.  There is a $1,000 catch-up contribution limit for those who are 55 or older.

Tax Brackets, Deductions & Credits:

  • The Federal tax brackets will increase by 7%.
  • The Standard Deduction will increase by 7% as well, to $27,700 for married couples and $13,850 for individuals.
  • The annual gifting limit will increase to $17,000.
  • Unfortunately, there is NOT an increase in the child tax credit ($2,000), capital loss cap ($3,000) or State & Local Tax Deduction ($10,000).

Overall, we view these changes as positive, as they create additional tax planning opportunities!  We are available if you have questions or would like to discuss how these changes could impact your personal situation. Please consult with your CPA for recommendations specific to you.

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