With inflation rearing its head, there is a bit of silver lining in the 2023 tax landscape. That’s because the cost-of-living adjustments by the IRS and the Social Security Administration are meant to take some of the sting away.
Tax Brackets Expand 7.1% While tax rates stay unchanged, the brackets related to these tax rates are increasing 7.1% due to inflation. This means that you will have more of your income taxed at a lower rate. The result will be a lower tax bill for most.
Social Security Benefits Up 8.7%! Inflationary adjustments mean retirement payments for social security got a big 8.7% boost. So, create a personal inflation rate that meets this number, and you create more opportunity to keep the inflation bug at bay.
Shelter More from Tax Inflation adjustments also increase the amount of money you can shelter from Uncle Sam through retirement plans. The additional income to shelter ranges from $500 for traditional and Roth IRAs to $2,000 for those in 401(k) and 403(b) plans. So, plan now to save more.
Digital Currency in the IRS Spotlight! Beginning in 2023, anyone with cryptocurrency will have reporting sent to the IRS. Much like stocks, bonds, and cash reporting requirements, the IRS is set on receiving notices recapping your activities. This means all transactions will need to be accounted for on your tax return.
More Changes to Retirement Plans Recent law changes will impact retirements savings plans over the next few years as Congress tries to incent all of us to save more. For 2023, the start of minimum required distributions in retirement accounts moves to age 73, up one year.
New Tax Credits And for those of you looking to purchase environmentally friendly vehicles and home improvements, look into the new tax credits now available to you.
The rapid pace of late changing tax laws is now becoming a way of life.
Thankfully you have an expert on your side to keep you informed.
John Albanese joined Eccezion in 1999, right after earning his Bachelor of Arts in Business Accounting from Trinity International University, and made partner at the age of 26. The McHenry native has built his reputation serving a variety of clients in both audit and tax capacities, developing into a go-to for construction companies.