Amid soaring inflation, the IRS this week announced higher federal tax brackets and standard deductions for 2023.
The agency raised the income thresholds for each bracket, applying to the 2023 tax year for returns filed in 2024.
These brackets indicate the amount you will have to pay for federal income tax on each part of your “taxable income”, calculated by subtracting the higher of the standard or itemized deductions from your adjusted gross income.
Higher standard deduction
The standard deduction will also increase in 2023 to €27,700 for married couples filing jointly, up from €25,900 in 2022. Single filers can claim €13,850, an increase from €12,950.
Other tax provisions adjust
The IRS also upped the numbers for dozens of other provisions, such as the alternative minimum tax, a parallel system for high earners and the estate tax exemption for wealthy families.
There is also a higher earned income tax credit, bringing the write-off to a maximum of €7,430 for low to moderate income taxfilers. And employees can contribute €3,050 to flexible health spending accounts.
This story first appeared on CNBC.com.
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