Tax Changes in 2023: What Businesses Need to Know.
Tax Changes in 2023: What Businesses Need to Know.
Every year, the IRS government comes up with a new tax slab for filling out tax returns. The IRS's announcement of the annual adjusted adjustments is one of the most important tax updates in 2023.
Such tax changes for 2023 are to prevent the phenomenon of “bracket creep” where taxpayers move to higher tax slabs due to inflation. The tax change for 2023 will impact the income earned in 2023.
Here are the new tax slabs for 2023 that you need to know before filing your tax returns.
The federal government has made significant changes in the income threshold limits for the year 2023. Although, the seven federal tax brackets remain the same.
New tax slabs 2023 brackets and rates for single filers, married couples filing jointly, and heads of households.
| Tax Rate | For Single Filers | For Married Individuals Filing Joint Returns | For Heads Of Households |
|---|---|---|---|
| 10% | $0 to $11000 | $0 to $22000 | $0 to $15700 |
| 12% | $11001 to $44725 | $22000 to $89450 | $15700 to $59850 |
| 22% | $44726 to $95375 | $89450 to $190750 | $59850 to $95350 |
| 24% | $174238.25 plus 37% of the amount over $578125 | $190750 to $364200 | $95350 to $182100 |
| 32% | $174238.25 plus 37% of the amount over $578125 | $364200 to $462500 | $182100 to $231250 |
| 35% | $174238.25 plus 37% of the amount over $578125 | $462500 to $693750 | $231250 to $578100 |
| 37% | $174238.25 plus 37% of the amount over $578125 | $693750 or more | $578100 or more |
Standard deduction
The standard deduction has increased to $900 for single filers and $1800 for joint filers and $1400 for heads of households.
The standard deduction for the year 2023 for those over 65 or blind is $1500 higher and $1850 higher if not unmarried and not a surviving spouse.
| Filing Status | Standard Deduction |
|---|---|
| Single | $13850 |
| Married, Filing Jointly | $27700 |
| Married Filing Separately | $13850 |
| Head of Household | $20800 |
What else are the updated tax changes for 2023?
- The earned income tax credit is a refundable tax credit for low- and moderate-income workers. The amount of the credit depends on the income and number of children, however, people without kids can still qualify. For the year 2023, the credit will have to pay a maximum of $7340 for qualifying taxpayers with three or more children.
- The annual exclusion for gifts for taxpayers has increased to $17000 per person.
- The adoption credit is up to $15,950.
- According to the new tax slab regime for 2023, estates valued at or below $12.92 million will not be subject to estate tax.
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