SAVANNAH, Ga. (WSAV) — Tuesday, the IRS announced it is modifying some of its rules significantly for the 2023 tax year due to the impact of inflation and how it can push workers into higher tax brackets even though their standard of living hasn’t changed.
The standard deduction is a specific dollar amount that reduces the amount of income on which you’re taxed.
-For married couples (and surviving spouses) filing a joint return, the standard deduction will rise to $27,700. The current tax year is $25,900.
– For married individuals filing separately and single taxpayers, the standard deduction will rise to $13,850. The current tax year is $12,950.
– In 2023, heads of households will see their standard deduction jump to $20,800 from $19,400 this year.
Earned Income Tax Credit
The Earned Income Tax Credit helps low- to moderate-income workers and families get a tax break.
For 2023, the greatest amount for households who claim the Earned Income Tax Credit will be $3,995 for one child, $6,604 for two children and $7,430 for three children. The current tax year’s maximum amount for those with at least three children is $6,935.
For taxable years beginning in 2023, the credit allowed for an adoption of a child with special needs is $15,950. The maximum credit allowed for other adoptions is the amount of qualified adoption expenses up to $15,950. The current tax year credit is $14,890 per child.
Estate Tax Limit
The Estate Tax is a tax on your right to transfer property at your death. It consists of an accounting of everything you own or have certain interests in at the date of death.
In 2023, the IRS will exempt up to $12.92 million from the estate tax, an increase of 7.1% from people who died in 2022 with an exemption of $12.06 million.
In 2023, gifts given of up to $17,000 can begin without paying taxes on the money. This is up $1,000 from the current year.