US 2023 Tax Updates

The Internal Revenue Service have announced tax inflation adjustments for the 2023 tax year. Click here to read further details about these annual adjustments. The key tax year 2023 adjustments described below generally apply to tax returns filed in 2024.

Summary of Key Updates

  • The Standard Deduction: The Standard Deduction will increase in 2023 by $900 to $13,850 for a single filer, by $1,400 to $20,800 for head of households and by $1,800 to $27,700 for married taxpayers filing jointly.
  • Marginal Rates: The tax rates remain the same for the 2023 tax year, however the income thresholds in each bracket have increased to give filers greater tax relief.
2023 Marginal Tax Rates (income brackets):
  • Alternative Minimum Tax Rate: For the 2023 tax year the AMT exemption amount is $81,300 or $126,500 for joint filers and starts to phase out at $578,150 or $1,156,300 for joint filers.
  • Earned Income Tax Credit: The maximum EITC for the tax year 2023 has increased from $6,935 in the 2022 tax year to $7,430 for qualifying taxpayers
  • Capital gains: The IRS has increased the income thresholds for long-term gains.
2023 Long-Term Capital Gains Tax Rate Thresholds:
  • Special Allowances: The foreign earned income exclusion increases from $112,000 to $120,000 in 2023. The annual exclusion for gifts rises from $16,000 to $17,000 in 2023. The basic estate tax exclusion for inheritances increases from $12,060,000 to $12,920,000 in 2023.