2023 Tax Changes That Will Affect Your Next Return

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With this year’s filing season coming to an end, it’s time to start thinking about next year’s taxes. A little planning now can save you money in the future.  

To help you get started, we’ve created a list of tax changes that will affect your tax return when you file in 2024.

The Standard Deduction

When you do your taxes, you have the option of itemizing or taking the standard deduction. The standard deduction is a set dollar amount you can deduct from your taxable income, no questions asked. Each year, the IRS adjusts the amount to account for inflation. 

For tax year 2023, the standard deductions based on filing status are: 

Single or Married filing separately: $13,850 (up $900 from 2022) 

Head of household: $20,800 (up $1,400) 

Married, filing jointly: $27,700 (up $1,800)  

If your qualified deductions are more than the standard deduction amount, then itemizing makes more sense. When you do your taxes with ezTaxReturn, we’ll compare both, so you choose the one that saves you the most money.

Income Tax Brackets

Your tax brackets are used to calculate your federal income taxes. There are seven tax brackets with marginal tax rates ranging from 10% to 37%. As your income increases, it’s taxed at a higher rate. Every year, the brackets are adjusted to account for inflation. With higher inflation this past year, the IRS has adjusted the tax brackets accordingly, with a roughly 7% increase across the board.

Here are the income tax brackets for 2023.

Tax rate	Single filers	Married filing jointly	Married filing separately	Head of household
10%	$0 to $11,000	$0 to $22,000	$0 to $11,000	$0 to $15,700
12%	$11,001 to $44,725	$22,001 to $89,450	$11,001 but not over $44,725	$15,700 to $59,850
22%	$44,726 to $95,375	$89,451 to $190,750	$44,726 to $95,375	$59,850 to $95,350
24%	$95,376 to $182,100	$190,751 to $364,200	$95,376 to $182,100	$95,350 to $182,100
32%	$182,101 to $231,250	$364,201 to $462,500	$182,101 to $231,250	$182,100 to $231,250
35%	$231,251 to $578,125	$462,501 to $693,750	$231,251 to $346,875	$231,250 to $578,100
37%	$578,126 or more	$693,751 or more	$346,875 or more	$578,100 or more

Retirement Accounts

The contribution limit for workers with a 401k, 403b and most 457 plans has increased to $22,500, allowing you to save more for retirement. Once you hit the big 5-0, you have the option of contributing an extra $7,500 to your account.  

If you have a traditional or Roth IRA, the annual contribution limit increases to $6,500. If you’re aged 50 or older, the catch-up contribution is $1,000.

HSA Contribution Limits

An HSA is a special savings account that lets you save money for medical expenses. There are three benefits of having an HSA: 

• your contributions aren’t subjected to federal taxes,
• your earnings are tax-free and
• your withdrawals for qualified medical expenses are also tax-free.

However, you can only contribute to an HSA if you have a High Deductible Health Plan (HDHP). The minimum deductible is $1,500 for self-only plans and $3,000 for family plans. If you have an HDHP, you can contribute up to $3,850 for self-only and $7,750 for families into an HSA. The annual catch-up contribution limit for those 55 or older is $1,000.

Alternative Minimum Tax (AMT)

The Alternative Minimum Tax (AMT) is meant to ensure that taxpayers who earn above a certain level pay their fair share of taxes. The AMT exemption amount is $81,300 for single filers and $126,500 for married couples filing jointly.  

The exemption phases out at 25 cents per dollar once your taxable income reaches $578,150 for single taxpayers and $1,156,300 for married couples filing jointly.

Capital Gains Tax Rates

When you make profit from an investment that you’ve held on to longer than a year, it is subject to long-term capital gains tax.  

Here are the 2023 capital gains tax rates:

Capital gains tax rate	Single	Married filing jointly	Married filing separately	Head of household
0%	$0 to $44,625	$0 to $89,250	$0 to $44,625	$0 to $59,750
15%	$44,626 – $492,300	$89,251 – $553,850	$44,626 – $276,900	$59,751 – $523,050
20%	$492,301or more	$553,851 or more	$276,901 or more	$523,051 or more

Gift Exclusion

For 2023, the annual gift exclusion is $17,000 ($34,000 per married couple). This means you can give $17,000 to as many people as you wish without having to report it to the IRS.

Keep these updates in mind as you plan your finances and prep for the 2024 tax season. When you’re ready to file, ezTaxReturn can help.

ezTaxReturn offers free tax filing for simple returns. Get started today.