Economic News
IRS Announces 2023 Tax Brackets Amid Inflation
With 2023 now within view, the Internal Revenue Service (IRS) has announced the tax brackets that will be used for the new tax year. While these adjustments are an annual tradition, this round of increases comes after a year where inflation has topped 8%. In turn, this latest round of raises is larger than usual. Across the board, brackets were adjusted by about 7%. In comparison, the change between 2021 and 2022 saw just a 1% increase.
Starting next year, individuals making up $11,000 will fall into the 10% bracket — an increase of $725 compared to last year. On the other end of the spectrum, the top-tier 37% marginal rate will not kick in for individuals until they’ve made over $578,125. That marks an adjustment of $38,225. For the 2022 tax year, this bracket saw a much more modest adjustment, rising only $6,525 from 2021.
Here’s a look at the new 2023 tax brackets alongside the 2022 brackets.
| Rate | 2023 Individuals | 2022 Individuals | 2023 Married Filing Jointly | 2022 Married Filing Jointly |
| 10% | Up to $11,000 | Up to $10,275 | Up to $22,000 | Up to $20,550 |
| 12% | $11,001 to $44,725 | $10,276 to $41,775 | $22,001 to $89,450 | $20,551 to $83,550 |
| 22% | $44,726 to $95,375 | $41,776 to $89,075 | $89,451 to $190,750 | $83,551 to $178,150 |
| 24% | $95,376 to $182,100 | $89,076 to $170,050 | $190,751 to $364,200 | $178,151 to $340,100 |
| 32% | $182,101 to $231,250 | $170,051 to $215,950 | $364,201 to $462,500 | $340,101 to $431,900 |
| 35% | $231,251 to $578,125 | $215,951 to $539,900 | $462,501 to $693,750 | $431,901 to $647,850 |
| 37% | Over $578,125 | Over $539,900 | Over $693,750 | Over $647,850 |
In addition to adjusting next year’s tax brackets, the IRS also increased the standard deduction. For individual taxpayers, the standard deduction will rise to $13,850 — an increase of $900. Likewise, the deduction for married couples filing jointly will climb $1,800, coming in at $27,700 for 2023. The standard deduction for heads of household will be $20,800, marking a $1,400 increase. For context, in 2022, the standard deduction for single filers rose by $400 while the deduction for married couples filing jointly went up by $800.
Also being adjusted for the 2023 tax year in the Earned Income Credit. Now the maximum for qualifying taxpayers who have three or more qualifying children will be $7,430. This is up from the $6,935 maximum for the 2022 tax year.
Given the ongoing inflation the United States has experienced, it should come as no surprise that this year’s tax bracket and standard deduction adjustment are a bit more dramatic than in years past. Still, these changes do reflect what kind of year it’s been. As a reminder, these new brackets and deductions will go into effect for the 2023 year — in other words, they won’t impact the tax returns that Americans will prepare by next April.
Also published on Medium.
Author
Other Articles by Jonathan Dyer
FinTech News
FinTech News
Stripe Raises $6.5 Billion, Now Valued at $50 Billion
FinTech giant Stripe has just closed a massive funding round, but is once again cutting its valuation. The online payments company has announced that it's just raised $6.5 billion. The Series I included participation from returning investors Andreessen Horowitz, Baillie Gifford, Founders Fund, General Catalyst, MSD Partners, and Thrive Capital, while new investors GIC, Goldman Sachs Asset and Wealth Management, and Temasek also joined. Goldman Sachs served as sole placement...
Credit Cards
