UPDATES TO 401k & IRA CONTRUBTIONS
401(k) plan Contribution Limits change in 2023 with an increase to $22,500, up from $20,500 for 2022.
The contribution limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government's Thrift Savings Plan is increased to $22,500, up from $20,500.
The income ranges for determining eligibility to make deductible contributions to traditional Individual Retirement Arrangements (IRAs), to contribute to Roth IRAs, and to claim the Saver's Credit all increased for 2023. Read More
CHANGES TO DEPENDENT CARE CREDITS
For qualifying taxpayers earning up to $125,000 in 2021, the maximum credit was substantially more generous and potentially refundable (up to $4,000 for one qualifying person and $8,000 for two or more qualifying persons). For 2023, only those earning $15,000 or less can qualify for the maximum credit, which has shrunk to $1,050 for one qualifying person and $2,100 for two or more qualifying persons. It's also no longer refundable.
CHANGES TO CHILD TAX CREDIT
Though many people really enjoyed the benefits last year due to the additional child tax credit and dependent care credit amounts they have been reduced for the 2022 and 2023 tax year. IRS may announce changes to these amounts in late December!
The CTC, the credit amount will drop to a maximum of $2,000 per dependent under age 17 for 2023, down from $3,600 for children under age six or $3,000 for children under age 18 in 2021.
Additionally, taxpayers once again need to have at least $2,500 in earned income to qualify for the refundable portion of the credit (in 2021, the income floor was temporarily suspended). READ MORE
2023 STANDARD DEDUCTIONS AMOUNTS
The standard deduction for married couples filing jointly for tax year 2023 rises to $27,700 up $800 from the prior year. For single taxpayers and married individuals filing separately, the standard deduction rises to $13,850 for 2022, up $400, and for heads of households, the standard deduction will be $20,800.
2023 MARGINAL TAX RATES
For tax year 2023, the top tax rate remains 37% for individual single taxpayers with incomes greater than $539,900 ($647,850 for married couples filing jointly).
The other rates are:
35%, for incomes over $215,950 ($431,900 for married couples filing jointly);
32% for incomes over $170,050 ($340,100 for married couples filing jointly);
24% for incomes over $89,075 ($178,150 for married couples filing jointly);
22% for incomes over $41,775 ($83,550 for married couples filing jointly);
12% for incomes over $10,275 ($20,550 for married couples filing jointly).
The lowest rate is 10% for incomes of single individuals with incomes of $10,275 or less ($20,550 for married couples filing jointly).