The IRS has recently announced the 2023 tax year annual inflation adjustments for over 60 various tax provisions tied to inflation rates.

Some items of most interest to taxpayers are as follows:

• Standard Deduction for Married Filing Joint increases to $27,700 (up $1,800), with the additional amount of $1,500 (up $100) added for each taxpayer 65 or older
• Maximum 401k employee contribution increases to $22,500 (up $2,000)
  • The catch-up contribution for employees 50 or older is $7,500 (up $1,000)
• Maximum SIMPLE employee contribution increases to $15,500 (up $1,500)
  • The catch-up contribution for employees 40 or older is $3,500 (up $500)
• Maximum IRA contribution increases to $6,500 (up $500)
• Elementary and Secondary School Teacher expense deduction increases to $300 (up $50)
• Marginal tax rate brackets broaden and expand to reflect inflation rates
• Unearned Income of Minor Children subject to the “Kiddie Tax” increases to $1,250 (up $100)
• The annual exclusion for gifts increases to $17,000 for the 2023 calendar year, up from $16,000
• The maximum estate exclusion increases to $12,920,000, up from $12,060,000 in 2022

If you have questions about other items for your specific situation in 2023, please contact your tax advisor for more information.