Liz Weston: 2023 tax changes and other essential money moves to know for the new year – OregonLive
By now, you’re probably familiar with the more obvious ways inflation affects your finances. Your money doesn’t go as far at the grocery store, for example. Credit card and other variable-rate debt is getting more expensive as the Federal Reserve raises short-term interest rates to combat inflation. Rates are also rising, albeit more slowly, on savings accounts.
But other ways inflation helps or hurts have gotten less attention. Here are some of the major changes to watch for in 2023.
BIG TAX CHANGES BENEFIT MOST TAXPAYERS
The IRS raised the standard deduction, which is taken by more than 90% of taxpayers, by $1,800 for married couples filing jointly and by $900 for single filers. The standard deduction amounts in 2023 will be $27,700 for married couples and $13,850 for singles.
In addition, the IRS adjusted federal tax brackets upward by about 7%. The larger deduction, higher brackets and other changes mean most taxpayers will pay less in 2023, especially if their incomes haven’t kept pace with inflation.
“It’s putting more money back into people’s pockets,” says Edward Karl, vice president of tax policy and advocacy for the American Institute of CPAs.
The IRS adjusted dozens of other tax provisions, raising the maximum earned income tax credits by $495 to $7,430 for a qualifying family with at least three children and boosting the maximum adoption credit by $1,060 to $15,950.
The annual exclusion for gifts — the amount you can give away to an individual before you’re required to file a gift tax return — goes up by $1,000 to $17,000. You won’t owe gift taxes until the amount you give away above that annual limit exceeds the lifetime estate and gift exemption limit, which is now $12,920,000, up a whopping $860,000 from 2022.
Higher earners, however, may pay more FICA taxes in 2023. The maximum salary taxed by Social Security will rise by $13,200 to $160,200.
Consider using a tax refund calculator or consulting a tax pro to see how these changes are likely to affect …….