Treavor Dodsworth CFP®, CPA, CKA®
#155 - 2023 Important Limits
Inflation doesn’t just impact the cost of your everyday expenses. It also impacts many of the investment and tax limits that apply to personal finance. Below are several notable limit changes for 2023. Note- not all of these are necessarily directly tied to inflation.
Tax Brackets - Tax brackets are shifting. For example, the top of the 24% bracket for married filing jointly is going from $340,100 in 2022 to $364,200 in 2023. This shift of brackets higher will generally make your overall federal income taxes less if your income is the same.
Standard Deduction - Shifting from $25,900 (married filing joint) and $12,950 (single) to $27,700 and $13,850 respectively.
Retirement Account Limits - 401k is increasing from $20,500 to $22,500. IRA is increasing from $6,000 to $6,500. HSA is increasing from $7,350 family to $7,750 family. These don't include the catch up.
Social Security Wage base - Increasing from $147,000 to $160,200.
There are several items that don’t increase with inflation and create a so-called phantom tax. Below are a couple of examples:
The provisional income that determines when Social Security is taxed is still the same. Over time this will cause more and more Social Security benefits to be subject to tax.
The 3.8% Net Investment Income Tax comes into play at the same modified adjusted gross income. Over time this will result in more and more people being subject to this tax.
Being aware of the limit changes will make sure you don’t miss out on any opportunities that may be available.
IRA Help - IRA Transactions That Can Be Missed
IRA Help alerts tax preparers and taxpayers to some easily missed IRA transactions.
Thank you for reading!