The Internal Revenue Service is increasing its standard deductions and income tax brackets for the 2023 year due to inflation.
The standard deduction for married couples filing jointly for the tax year 2023 rises to $27,700 up $1,800 from the prior year. For single taxpayers and married individuals filing separately, the standard deduction rises to $13,850 for 2023, up $900.
For heads of households, the standard deduction will be $20,800 for the tax year 2023, up $1,400 from last year.
According to recent data by the Bureau of Labor Statistics, rent is up 7.2%, electricity prices are up 15.5%, groceries are up 13%, and health insurance is about 30% more expensive when compared to last year.
Income tax inflation adjustments are an annual occurrence, and tax brackets indicate how much money you will owe for federal income taxes on each portion of your “taxable income, which is calculated by subtracting the greater of the standard or itemized deductions from your adjusted gross income.
For more information, visit https://www.irs.gov/newsroom/irs-provides-tax-inflation-adjustments-for-tax-year-2023