The Internal Revenue Service’s recently adjusted tax brackets are now in effect, allowing taxpayers to keep more of their money in the face of rising inflation.
Based on the article published by Washington Examiner on January 03, 2023, the IRS’s tax brackets will be adjusted to avoid taxpayers from being forced into a higher bracket as a result of receiving raises in wages in reaction to inflation.
For single taxpayers, the standard deduction will rise by $900 to $13,850 this year, according to the IRS. It was defined as the particular dollar amount that lowers the amount of income that is subject to taxation. The standard deduction for married individuals filing jointly will rise to $27,700 for the current tax year according to IRS.
This year, the marginal rate ranges are expanding as well, with the top rate of 37% applicable to individual taxpayers with incomes over $578,125 or $693,750 for married couples filing jointly. This is an increase from the previous year, when the thresholds were $539,900 for single taxpayers and $647,850 for married filers, respectively. The income limits for the other tax rates have also been raised; the lowest rate, 10%, is now applicable to single taxpayers making less than $11,000 or to married couples filing jointly earning less than $22,000.
In addition, taxpayers can benefit from the increased 401(k) contribution limit in 2023, which will rise to $22,500, an increase of $2,000 from the previous year. According to the IRS, the maximum yearly contribution that taxpayers may make to their individual retirement accounts will rise from the current $6,000 limitation to $6,500.
The Social Security Administration increased Supplemental Security Income payouts by 8.7%, the largest increase since 1981, in order to keep up with inflation in 2023.