WHAT'S NEW FOR 2023

 

WHAT’S NEW IN TAXES FOR 2023

 

COMPLIED BY ROBERT D FLACH

THE INTERNET’S “WANDERING TAX PRO”

 

Here are the inflation and cost of living adjusted

numbers for tax year 2023 -

 

STANDARD DEDUCTION

Single and Married Filing Separate = $13,850

Married Filing Joint and Surviving Spouse = $27,700

Head of Household = $20,800

 

The Standard Deduction for a dependent is the greater of –

 

(1) $1,250, or

(2) the sum of $400 and the individual's earned income (not to exceed $13,850).

 

The additional amount for age 65 or blind is –

 

$1,500 for married taxpayers 

$1,850 for Single or Head of Household filers.

PERSONAL EXEMPTION AMOUNT

There is no longer a personal exemption deduction.  However, the amount of the gross income limitation for determining if a person is a qualifying relative is $4,700. 

CONTRIBUTION LIMITS FOR PENSION PLANS 

IRA = $6,500

IRA Catch-Up Contributions at age 50 and older = $1,000

SIMPLE Plan = $15,500

SIMPLE Catch-Up Contributions at age 50 and older = $3,500

401(k), 403(b), 457, and Thrift Savings Plan = $22,500

401(k), 403(b), 457, and Thrift Savings Plan Catch-Up Contributions at age 50 and older = $7,500

SEP or Solo401(k) plan = $66,000.   

 

AGI phase-out range for contributions to a traditional IRA by active participants in an employer retirement plan:

 

$73,000 - $83,000 = Single and Head of Household

$116,000 - $136,000 = Married Filing Joint and Surviving Spouse

$0 - $10,000 = Married Filing Separate

 

The deduction on a joint return for a spouse that is not an active participant in an employer plan, but who is married to one who is, phases out at AGI of $218,000 to $228,000.    

 

Individuals can make contributions to a traditional IRA account as long as they have qualified “compensation” – taxable salaries and wages, net earnings from self-employment, nontaxable combat pay, taxable alimony, and nontaxable difficulty of care payments – regardless of their age.     

 

AGI phase-out range for contributions to a Roth IRA:

 

$138,000 - $153,000 = Single and Head of Household

$218,000 - $228,000 = Married Filing Joint and Surviving Spouse

$0 - $10,000 = Married Filing Separate

STANDARD MILEAGE ALLOWANCE

Beginning on January 1, 2023, the standard mileage rates for the use of a car are -

•  65.5 cents per mile driven for business use,

•  22 cents per mile driven for medical or moving purposes for qualified active-duty members of the Armed Forces, and

•  14 cents per mile driven in service of charitable organizations.

These rates apply to gasoline and diesel-powered and electric and hybrid-electric automobiles.

2023 FEDERAL TAX RATES  

RATE	SINGLE	MARRIED JOINT	MARRIED SEPARATE	HEAD OF HOUSEHOLD
10%	0 to 11,000	0 to 22,000	0 to 11,000	0 to 15,700
12%	11,000 to 44,725	22,000 to 89,450	11,000 to 44,725	15,700 to 59,850
22%	44,725 to 95,375	89,450 to 190,750	44,725 to 95,375	59,850 to 95,350
24%	95,375 to 182,100	190,750 to 364,200	95,375 to 182,100	95,350 to 182,100
32%	182,100 to 231,250	364,200 to 462,500	182,100 to 231,250	182,100 to 231,250
35%	231,250 to 578,125	462,500 to 693,750	231,250 to 346,875	231,250 to 578,100
37%	578,125 or more	693,750 or more	246,875 or more	578,100 or more

QUALIFIED DIVIDENDS AND LONG-TERM CAPITAL GAINS TAX 0% INCOME THRESHOLD

SINGLE	MARRIED JOINT	HEAD OF HOUSEHOLD	MARRIED SEPARATE
$44,625	$89,250	$59,750	$44,625

ENERGY EFFICIENT HOME IMPROVEMENT CREDIT

 

The credit for energy efficient purchases for or improvements to a personal residence is increased to 30% of eligible costs, which includes the cost of installation. 

 

The annual limit is increased to $1,200 (with some exceptions discussed below).  There is NO lifetime limit. 

 

A credit can be claimed for qualifying purchases for and improvements to a second personal residence, such as a vacation home.

SOCIAL SECURITY AND MEDICARE

 

The wage base for computing the Social Security component of the FICA tax is $160,200.  The maximum withholding for Social Security tax is $9,932.40.

 

The Self-Employment Tax is a 12.4% Social Security tax on the first $160,200 of self-employment income, for a maximum of $19,864.80, plus a 2.9% Medicare tax on all self-employment income.

 

The earnings limit for those younger than full retirement age is $21,240. ($1 deducted from benefits for each $2 earned over $21,240).  The earnings limit for those turning full retirement age in 2021 is $ 56,520. ($1 deducted from benefits for each $3 earned over $56,520until the month the worker turns full retirement age).   

 

ESTATE AND GIFT TAX

 

The annual gift tax exclusion is $17,000 per person. 

 

The estate tax exemption, also known as the unified credit, is $12,920,000.

 

THE SHAFT

 

I am not talking about what the government gives taxpayers.  The “shaft tax” imposed on the first sale by the manufacturer, producer, or importer of any shaft of a type used in the manufacture of arrows is 59 cents per shaft.

 

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If you have any questions about the above, I suggest you consult your, or a, tax professional.

 

 

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