IRS raises threshold of income tax brackets for 2023 due to inflation
Misty Severi
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The IRS is making multiple changes to its tax code for the 2023 tax year. Changes include raising the threshold for tax brackets and boosting standard deductions.
The tax bracket threshold is raised annually based on inflation. However, the adjustment this year is particularly high compared to usual because of the high rise in the cost of living. Grocery stores have seen a rise in prices for eggs, milk, and bread.
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The top marginal tax rate will apply to individuals whose annual income is above $578,125 and married couples whose annual income is above $693,750 for 2023 — that’s up 7% compared to last year. The standard deduction will climb to $27,700 for couples and $13,850 for individuals, both also up about 7%.
The changes to the standard deductions, the biggest adjustment since 1985, will give people a higher amount of earned income that does not need to be reported on their tax forms and reduce the amount residents will need to pay in taxes.
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The new brackets range from individuals who make $10,275 or less a year to individuals who make $539,900 or more. Couples who file jointly will see brackets ranging from $20,550 or less to $647,850 or more, according to USA Today.
The new tax brackets will automatically apply when taxpayers file their taxes.