Thomson Reuters Checkpoint has calculated the 2023 tax brackets, as well as other inflation-adjusted tax numbers based on the recently released August 2022 inflation rate. See Payroll Update, 9/14/2022 regarding other estimated key figures.
Tax rate schedules.
The tax rate schedules for 2023 will be as follows.
For married individuals filing joint returns and surviving spouses:
If taxable income is under $22,000; the tax is 10% of taxable income
If taxable income is over $22,000 but not over $89,450; the tax is $2,200.00 plus 12% of the amount over $22,000
If taxable income is over $89,450 but not over $190,750; the tax is $10,294.00 plus 22% of the amount over $89,450
If taxable income is over $190,750 but not over $364,200; the tax is $32,580.00 plus 24% of the amount over $190,750
If taxable income is over $364,200 but not over $462,500; the tax is $74,208.00 plus 32% of the amount over $364,200
If taxable income is over $462,500 but not over $693,750; the tax is $105,664.00 plus 35% of the amount over $462,500
If taxable income is over $693,750; the tax is $186,601.50 plus 37% of the amount over $693,750
For single individuals (other than heads of households and surviving spouses):
If taxable income is not over $11,000; the tax is 10% of taxable income
If taxable income is over $11,000 but not over $44,725; the tax is $1,100.00 plus 12% of the amount over $11,000
If taxable income is over $44,725 but not over $95,375; the tax is $5,147.00
plus 22% of the amount over $44,725
If taxable income is over $95,375 but not over $182,100; the tax is $16,290.00 plus 24% of the amount over $95,375
If taxable income is over $182,100 but not over $231,250; the tax is $37,104.00 plus 32% of the amount over $182,100
If taxable income is over $231,250 but not over $578,125; the tax is $52,832.00 plus 35% of the amount over $231,250
If taxable income is over $578,125; the tax is $174,238.25 plus 37% of the amount over $578,125
For heads of household:
If taxable income is not over $15,700: the tax is 10% of taxable income
If taxable income is over $15,700 but not over $59,850; the tax is $1,570.00 plus 12% of the excess over $15,700
If taxable income is over $59,850 but not over $95,350; the tax is $6,868.00 plus 22% of the excess over $59,850
If taxable income is over $95,350 but not over $182,100; the tax is $14,678.00 plus 24% of the excess over $95,350
If taxable income is over $182,100 but not over $231,250; the tax is $35,498.00 plus 32% of the excess over $182,100
If taxable income is over $231,250 but not over $578,100; the tax is $51,226.00 plus 35% of the excess over $231,250
If taxable income is over $578,100; the tax is $172,623.50 plus 37% of the excess over $578,100
For marrieds filing separate returns:
If taxable income is not over $11,000; the tax is 10% of taxable income
If taxable income is over $11,000 but not over $44,725 the tax is $1,100.00 plus 12% of the excess over $11,000
If taxable income is over $44,725 but not over $95,375; the tax is $5,147.00 plus 22% of the excess over $44,725
If taxable income is over $95,37595,375 but not over $182,100; the tax is $16,290.00 plus 24% of the excess over $95,375
If taxable income is over $182,100 but not over $231,250; the tax is $37,104.00 plus 32% of the excess over $182,100
If taxable income is over $231,250 but not over $346,875; the tax is $52,832.00 plus 35% of the excess over $231,250
If taxable income is over $346,875; the tax is $93,300.75 plus 37% of the excess over $346,875
For estates and trusts:
If taxable income is less than $2,900; the tax is 10% of taxable income
If taxable income is over $2,900 but not over $10,550; the tax is $290.00 plus 24% of the excess over $2,900
If taxable income is over $10,550 but not over $14,450; the tax is $2,126.00 plus 35% of the excess over $10,550
If taxable income is over $14,450; the tax is $3,491.00, plus 37% of the excess over $14,450
Standard deductions.
The basic standard deduction for 2023 will be:
Joint return or surviving spouse $27,700 ($25,900 for 2022)
Single (not head of household or surviving spouse) $13,850 ($12,950 for 2022)
Head of household $20,800 ($19,400 for 2022)
Married filing separate returns $13,850 ($12,950 for 2022)
Dependents.
For an individual who can be claimed as a dependent on another’s return, the basic standard deduction for 2023 will be $1,250 ($1,150 in 2022), or $400 ($400 in 2022) plus the individual’s earned income, whichever is greater. However, the standard deduction may not exceed the regular standard deduction for that individual.
Older and blind taxpayers.
For 2023, the additional standard deduction for married taxpayers 65 or over or blind will be $1,500 ($1,400 in 2022). For a single taxpayer or head of household who is 65 or over or blind, the additional standard deduction for 2023 will be $1,850 ($1,750 in 2022).
Exemption amount.
While the dependency exemption deduction under Code Sec. 151 is reduced to zero from 2018 through 2025, this reduction isn’t taken into account for other purposes of the Code, such as who is a qualifying relative for family credit purposes, and eligibility for head-of-household status. For 2023, this amount is $4,700 ($4,400 in 2022).
Kiddie tax.
The exemption from the kiddie tax for 2023 will be $2,500 ($2,300 in 2022). A parent will be able to elect to include a child’s income on the parent’s return for 2023 if the child’s income is more than $1,250 and less than $12,500 ($1,150 and $11,500 in 2022).
Adoption credit.
For 2023, the credit allowed for an adoption of a child with special needs will be $15,950 ($14,890 in 2022). The maximum credit allowed for other adoptions will be the amount of qualified adoption expenses up to $15,950 ($14,890 in 2022).
For 2023, the credit will begin to phase out for taxpayers with MAGI in excess of $239,230 ($223,410 in 2022). The phaseout will be complete if MAGI is $279,230 ($263,410 in 2022).
Adoption exclusion.
For 2023, the amount of employer adoption assistance that can be excluded from an employee’s gross income for the adoption of a child will be $15,950 ($14,890 in 2022). In the case of an adoption of a child with special needs, the amount that can be excluded will be $15,950 ($14,890 in 2022). The exclusion is allowed regardless of expenses.
For 2023, the amount excludable from an employee’s gross income will begin to phase out for taxpayers with MAGI in excess of $239,230 ($223,410 in 2022). The phaseout will be complete if MAGI is $279,230 ($263,410 in 2022).
MAGI limits for making contributions to Roth IRAs.
Individuals may make nondeductible contributions to a Roth IRA, subject to the overall limit on IRA contributions.
The maximum annual contribution that can be made to a Roth IRA is phased out for taxpayers with MAGI over certain levels for the tax year. For taxpayers filing joint returns, the otherwise allowable contributions to a Roth IRA will be phased out ratably for 2023 for MAGI between $218,000 and $228,000 ($204,000 and $214,000 in 2022).
For single taxpayers and heads of household, it will be phased out ratably for MAGI between $138,000 and $153,000 ($129,000 and $144,000 in 2022). For married taxpayers filing separate returns, the otherwise allowable contribution will continue to be phased out ratably for MAGI between $0 and $10,000 ($0 and $10,000 in 2022).
Get all the latest tax, accounting, audit, and corporate finance news with Checkpoint Edge. Sign up for a free 7-day trial today.
