Inflation has permeated every aspect of living these days and the government continues to fight against rising costs. Following last week’s Social Security Administration adjustment to cost of living increase with an increase of 8.7% for benefits, the IRS has announced adjustments to income tax brackets for 2023. While it is not new news that tax rates are adjusted each year for inflation, the most recent announcement by the IRS is substantial enough to show the government’s dedication to bringing down inflation by adjusting rates by an increase of 7 percent.
For those taxpayers in the top tax rate of 37%, the change shifted upward from $539,900 to $578,125 filing as single. The $40,000 shift allows those taxpayers to now pay at the lower 35% as compared to 37%. The 35% bracket will now start at $231,250 for single and $462,500 for married and the 32% will start at $182,100 and $364,200 for those filing jointly. The 25% rate will start at $95,375 for single and $190,750 for filing jointly. The 22% will start at $44,725 for single and $89,450 for filing jointly. The 12% will start at $11,000 for single and $22,000 for filing jointly.
Other areas of the tax code will also see changes. The standard deduction gets a boost of $1,800 to $27,700 for married filing jointly and $900 increase for individuals at $13,850. The thing to note about these changes is that Americans whose salaries did not increase with inflation are the ones who will benefit the most.
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