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Tax Day
Updated: January 5, 2024
The deadline for submitting your taxes for Tax Year 2023 is Monday, April 15, 2024. The deadline for submitting your taxes for Tax Year 2022 was Tuesday, April 18, 2023. For certain scenarios, we may consider an extension to file, but there are payment requirements that matter for the deadline. Call the office or send a message about your return if you have any questions.
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Seven Big Changes for Tax Year 2023
Before we skip ahead to this year, everything you need to know about tax year 2022, and filing your taxes in April is here in this blog “Proactive Year-end Tax Planning for 2022 and Beyond”.
1.
Inflation Adjustment
Last October 2022, an inflation adjustment was announced by the IRS for tax year 2023. The increase is around 7%, which will affect your federal tax bracket and other amounts. The adjustment is a bigger jump than what we see each year, and will help some people stay in a lower bracket. That’s a helpful change.
2.
Income Tax Brackets Change
The seven tax brackets for income tax stayed the same in 2022. For 2023, the IRS has notably changed the income thresholds. Compare the changes below for those seven tax rates.
Single Filers 2022
for filing due April 2023
| Tax rate | Taxable income bracket | Tax owed |
|---|---|---|
| 10% | $0 to $10,275 | 10% of taxable income |
| 12% | $10,276 to $41,775 | $1,027.50 plus 12% of the amount over $10,275 |
| 22% | $41,776 to $89,075 | $4,807.50 plus 22% of the amount over $41,775 |
| 24% | $89,076 to $170,050 | $15,213.50 plus 24% of the amount over $89,075 |
| 32% | $170,051 to $215,950 | $34,647.50 plus 32% of the amount over $170,050 |
| 35% | $215,951 to $539,900 | $49,335.50 plus 35% of the amount over $215,950 |
| 37% | $539,901 or more | $162,718 plus 37% of the amount over $539,900 |
Single Filers 2023
for filing due April 2024
| Tax rate | Taxable income bracket | Tax owed |
|---|---|---|
| 10% | $0 to $11,000 | 10% of taxable income |
| 12% | $11,001 to $44,725 | $1,100 plus 12% of the amount over $11,000 |
| 22% | $44,726 to $95,375 | $5,147 plus 22% of the amount over $44,725 |
| 24% | $95,376 to $182,100 | $16,290 plus 24% of the amount over $95,375 |
| 32% | $182,101 to $231,250 | $37,104 plus 32% of the amount over $182,100 |
| 35% | $231,251 to $578,125 | $52,832 plus 35% of the amount over $231,250 |
| 37% | $578,126 or more | $174,238.25 plus 37% of the amount over $578,125 |
Click your scenario below to expand and compare the rates between tax years 2022 and 2023:
3.
Standard Deduction Increase
For the 2023 tax year, the deduction is going up at $900 to $1,800 depending on your tax scenario. If you take the standard deduction to lower the income you can taxed on, this is a nice plus. For single filers (and married filing separately), the deduction increases $900. For married couples, it’s up $1,800. For heads of households, it’s up $1,400.
For those over 65 or blind, this deduction is up $1,500. For the additional scenario of being unmarried (and not a surviving spouse), it’s $1,850 higher.
| Filing Status | Standard deduction 2022 | Standard deduction 2023 |
|---|---|---|
| Single | $12,950 | $13,850 |
| Married, Filing Jointly | $25,900 | $27,700 |
| Married, Filing Separately | $12,950 | $13,850 |
| Head of Household | $19,400 | $20,800 |
4.
Capital Gains Tax Thresholds Change
For 2023, the income thresholds are going up for long-term gains. Short-term gains are still taxed as ordinary income. This impacts tax on the profits during the sale of an asset, like a stock transaction. This includes sales of cryptocurrency, too.
Capital Gains Rates 2022
for filing due April 2023
| Single | Married, Filing Jointly | Married, Filing Separately | Head of Household | |
|---|---|---|---|---|
| 0% | $0 to $41,675 | $0 to $83,350 | $0 to $41,675 | $0 to $55,800 |
| 15% | $41,676 to $459,750 | $83,351 to $517,200 | $41,676 to $258,600 | $55,801 to $488,500 |
| 20% | $459,751 or more | $517,201 or more | $258,601 or more | $488,501 or more |
Capital Gains Rates 2023
for filing due April 2024
| Single | Married, Filing Jointly | Married, Filing Separately | Head of Household | |
|---|---|---|---|---|
| 0% | $0 to $44,625 | $0 to $89,250 | $0 to $44,625 | $0 to $59,750 |
| 15% | $44,626 to $492,300 | $89,251 to $553,850 | $44,626 to $276,900 | $59,751 to $523,050 |
| 20% | $492,301 or more | $553,851 or more | $276,901 or more | $523,051 or more |
5.
Earned Income Tax Credit Rises
This is a refundable tax credit designed for qualifying earners. It may or may not apply to your scenario, but the refundable credit is going up. 
Depending on your income and number of children, the earned income credit (EIC) is $560 to $6,935 for tax year 2022.
For 2023, the max is increased to $7,430. For that maximum, you must be qualify and have 3 children or more.
Side note: you may still qualify for the EIC if you do not have children, though the EIC requirements still apply. If you have questions, please contact us.
6.
Gift Limit Goes Up
For tax year 2023, you can now give gifts up to $17,000 per person without having to filing a gift tax return. This is an annual limit to be able to exclude certain gifts. Other rules may apply, depending on the gift.
If you are planning to give gifts and want to plan in advance, please contact us.
7.
Other Changes That May Apply to You
Quick notes on adoption, estate tax and FSAs, below:
Adoption Credit — increases to a max of $15,950 for tax year 2023. This applies if you have adoption expenses that qualify.
Estate Tax Exclusion — estates valued at $12.92 million or below will not be subject to estate tax in 2023. In 2022, that threshold value was $12.06 million.
FSA Contributions — for tax year 2023, you can contribute to a health plan’s Flexible Spending Account (FSA) to a max of $3,050. If your plan allows, you can carry over a max of $610 to the next tax year.
We Are Here to Help
We Are Here to HelpPlease keep in mind that the rules for these options and changes can be more complicated, depending on your tax scenario. Have a question? Reach out anytime. As always, we look forward to helping you with your tax returns and helping you to plan your future.
– The Financial 1 Team
This information is not intended to be a substitute for specific individualized tax, legal or investment planning advice as individual situations will vary. For specific advice about your situation, please consult with a lawyer or financial professional. Past performance is no guarantee of future results. The views stated in this letter are not necessarily the opinion of Tatyana Bunich (CEP) (RFC) or Financial 1 and should not be construed, directly or indirectly, as an offer to buy or sell any securities mentioned herein. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed. Please note that statements made in this article may be subject to change depending on any revisions to the tax code or any additional changes in government policy. Please note that individual situations can vary. Unless certain criteria are met, Roth IRA owners must be 59½ or older and have held the IRA for five years before tax-free withdrawals are permitted. Additionally, each converted amount is subject to its own five-year holding period. Investors should consult a tax advisor before deciding to do a conversion.