The Internal Revenue Service released this week higher federal tax brackets and standard deductions for 2023 amid soaring inflation.
The income thresholds have increased for each bracket, which will apply for tax year 2023 and returns filed in 2024, CNBC reported.
The tax brackets show how much a taxpayer will owe in federal income taxes on each “taxable income” portion, which is calculated by adding up all income sources and then subtracting any standard deductions, according to H&R Block.
These are the newly released federal tax brackets for tax year 2023
Married
| $22,000 or less | 10% of the taxable income |
| $22,001 to $89,450 | $2,200 plus 12% of the amount over $22,000 |
| $89,451 to $190,750 | $10,294 plus 22% of the amount over $89,450 |
| $190,751 to $364,200 | $32,580 plus 24% of the amount over $190,750 |
| $364,201 to $462,500 | $74,208 plus 32% of the amount over $364,200 |
| $462,501 to $693,750 | $105,664 plus 35% of the amount over $462,500 |
| $693,751 or more | $186,601.50 plus 37% of the amount over $693,750 |
Single:
| $11,000 or less | 10% of the taxable income |
| $11,001 to $44,725 | $1,100 plus 12% of the amount over $11,000 |
| $44,726 to $95,375 | $5,147 plus 22% of the amount over $44,725 |
| $95,376 to $182,100 | $16,290 plus 24% of the amount over $95,375 |
| $182,101 to $231,250 | $37,104 plus 32% of the amount over $182,100 |
| $231,251 to $578,125 | $52,832 plus 35% of the amount over $231,250 |
| $578,126 or more | $174,238.25 plus 37% of the amount over $578,1 |
The standard deduction will also increase in 2023, rising to $27,700 for married couples filing jointly, which is an increase from $25,900 in 2022.
Single filers can claim $13,850, an increase from $12,950 in 2022.
The IRS also boosted figures for dozens of other provisions, such as the alternative minimum tax, a parallel system for higher earners and the estate tax exemption for wealthy families.
There’s also a higher earned income tax credit, bumping the write-off to a maximum of $7,430 for low- to moderate-income filers. And employees can funnel $3,050 into health flexible spending accounts.
Story written by Iman Palm. Published in Yahoo News. Click here for the link to the article IRS releases new income tax brackets for 2023 (yahoo.com)
