2023 Tax Brackets, Standard Deduction, and Other Changes — Oblivious Investor
The IRS recently published the annual inflation updates for 2023. If you have questions about a particular amount that I do not mention here, you can likely find it in the official IRS announcements:
Single 2023 Tax Brackets
| Taxable Income |
Tax Bracket: |
| $0-$11,000 | 10% |
| $11,000-$44,725 | 12% |
| $44,725-$95,375 | 22% |
| $95,375-$182,100 | 24% |
| $182,100-$231,250 | 32% |
| $231,250-$578,125 | 35% |
| $578,125+ | 37% |
Married Filing Jointly 2023 Tax Brackets
| Taxable Income |
Tax Bracket: |
| $0-$22,000 | 10% |
| $22,000-$89,450 | 12% |
| $89,450-$190,750 | 22% |
| $190,750-$364,200 | 24% |
| $364,200-$462,500 | 32% |
| $462,500-$693,750 | 35% |
| $693,750+ | 37% |
Head of Household 2023 Tax Brackets
| Taxable Income |
Tax Bracket: |
| $0-$15,700 | 10% |
| $15,700-$59,850 | 12% |
| $59,850-$95,350 | 22% |
| $95,350-$182,100 | 24% |
| $182,100-$231,250 | 32% |
| $231,250-$578,100 | 35% |
| $578,100+ | 37% |
Married Filing Separately 2023 Tax Brackets
| Taxable Income |
Marginal Tax Rate: |
| $0-$11,000 | 10% |
| $11,000-$44,725 | 12% |
| $44,725-$95,375 | 22% |
| $95,375-$182,100 | 24% |
| $182,100-$231,250 | 32% |
| $231,250-$346,875 | 35% |
| $346,875+ | 37% |
Standard Deduction Amounts
The 2023 standard deduction amounts are as follows:
- Single or married filing separately: $13,850
- Married filing jointly: $27,700
- Head of household: $20,800
The additional standard deduction for people who have reached age 65 (or who are blind) is $1,500 for each married taxpayer or $1,850 for unmarried taxpayers.
IRA Contribution Limits
The contribution limit for Roth IRA and traditional IRA accounts is increased to $6,500.
The catch-up contribution limit for people age 50 or over does not get inflation adjustments and therefore is still $1,000.
401(k), 403(b), 457(b) Contribution Limits
The salary deferral limit for 401(k) and other similar plans is increased to $22,500.
The catch-up contribution limit for 401(k) and other similar plans for people age 50 and over is increased to $7,500.
The maximum possible contribution for defined contribution plans (e.g., for a self-employed person with a sufficiently high income contributing to a solo 401(k)) is increased to $66,000.
Health Savings Account Contribution Limits
For 2023, the maximum HSA contribution for somebody with self-only coverage under a high deductible health plan is $3,850. The limit for somebody with family coverage under such a plan is $7,750.
The HSA catch-up contribution limit for people age 55 and over is not inflation adjusted, so it remains at $1,000.
Capital Gains and Qualified Dividends
For 2023, long-term capital gains and qualified dividends face the following tax rates:
- 0% tax rate if they fall below $89,250 of taxable income if married filing jointly, $59,750 if head of household, or $44,625 if filing as single or married filing separately.
- 15% tax rate if they fall above the 0% threshold but below $553,850 if married filing jointly, $523,050 if head of household, $492,300 if single, or $276,900 if married filing separately.
- 20% tax rate if they fall above the 15% threshold.
Alternative Minimum Tax (AMT)
The AMT exemption amount is increased to:
- $81,300 for single people and people filing as head of household,
- $126,500 for married people filing jointly, and
- $63,250 for married people filing separately.
Annual Gift Tax Exclusion
For 2023 the annual exclusion for gifts will be $17,000.
Estate Tax
The estate tax exclusion is increased to $12,920,000 per decedent.
Pass-Through Business Income
With respect to the 20% deduction for qualified pass-through income, for 2023, the threshold amount at which the “specified service trade or business” phaseout and the wage (or wage+property) limitations begin to kick in will be $364,200 for married taxpayers filing jointly and $182,100 for single taxpayers, people filing as head of household, and for married people filing separately.
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