What the 2023 Cost-of-living Adjustments Mean for You
Be sure to take these adjustments into account
The Internal Revenue Service (IRS) recently issued its 2023 cost-of-living adjustments for more than 60 tax provisions. With inflation up significantly this year, many amounts increased considerably over 2022 amounts. As you implement tax strategies for 2023, be sure to take these 2023 adjustments into account.
Also, keep in mind that, under the Tax Cuts and Jobs Act (TCJA), annual inflation adjustments are calculated using the chained consumer price index (also known as C-CPI-U). This increases tax-bracket thresholds, the standard deduction, certain exemptions and other figures at a slower rate than was the case with the consumer price index previously used, potentially pushing taxpayers into higher tax brackets and making various breaks worth less over time. The TCJA adopts the C-CPI-U on a permanent basis.
Individual income taxes
Tax-bracket thresholds increase for each filing status; however, because they are based on percentages, they increase more significantly for the higher brackets. For example, the top of the 10 percent bracket increases by $725, to $1,450, depending on filing status, but the top of the 35 percent bracket increases by $22,950 to $45,900, again depending on filing status.
Please select this link to read the complete article from OSAP Strategic Partner Clark Schaefer Hackett.