Tax Planning: Tax Year 2023

A new year means new tax changes. While Congress didn’t pass any major tax reform last year, some tax provisions have been updated that could affect how much money you keep and how much goes to Uncle Sam.

In this blog, we have included some of the most significant changes for investors and retirees.  Please note that these changes relate to your filing for the 2023 tax year. Our suggestion: Look over the material below and circle anything you have questions about. Then, feel free to share this information with your tax professional! They should be able to answer any questions you have.

One last thing. As you know, tax season is now upon us. To help reduce the stress of tax season, feel free to have your accountant or tax preparer contact us directly for any needed investment information.  We are always happy to coordinate with other professionals you work with to minimize your workload.

As always, if there’s anything our team can do to be of assistance, please let us know. Have a great month!


Important Updates for the 2023 Tax Year

Changes to the Filing Deadline

One thing to note before we get into the nitty-gritty: After two straight years with an April 18 deadline, this year returns to the more traditional April 15 deadline.  (Remember, though, that filing earlier is almost always better than filing later.)

For those who need to file for an extension, the due date is October 15.

Changes to Federal Tax Brackets

As it often does, the IRS has adjusted the 2023 tax brackets based on inflation. These adjustments are even greater than usual this year as the country continues to contend with higher-than-normal prices.  While tax rates have not changed, bracket ranges increased by roughly 7%. That’s good news for those whose wages have gone up to keep pace with the rise in prices, because it means they won’t necessarily get bumped into a higher bracket. And some people may even find themselves dropping down a level, even if their pay stayed the same.

The brackets for the 2023 tax year are as follows:

Tax Rate Single Married, filing jointly Head of Household
10% 0 to $11,000 0 to $22,000 0 to $15,700
12% $11,001 to $44,725 $22,001 to $89,450 $15,701 to $59,850
22% $44,726 to $95,375 $89,451 to $190,750 $59,851 to $95,350
24% $95,376 to $182,100 $190,751 to $364,200 $95,351 to $182,100
32% $182,101 to $231,250 $364,201 to $462,500 $182,101 to $231,250
35% $231,251 to $578,125 $462,501 to $693,750 $231,251 to $578,100
37% $578,126 and up $693,751 and up $578,101 and up

Changes to Capital Gains

The income threshold for long-term capital gains rates has also gone up.

Tax Rate Single Married, filing jointly Head of Household
0% 0 to $44,625 0 to $89,250 0 to $59,750
15% $44,626 to $492,300 $$89,251 to $553,850 $59,751 to $523,050
20% $492,301 and up $553,851 and up $523,051 and up

Changes to Deductions

As you know, when you file your taxes, you can either claim a standard deduction or dive into the details and itemize your deductions. (Since the passing of the Tax Cuts and Jobs Act back in 2017, most people choose the former.)  Per the IRS, the standard deduction is “a specific dollar amount that reduces the amount of income on which you’ve been taxed.”

Due to inflation, the IRS has also increased the standard deduction for your 2023 taxes. For singles, the standard deduction is now $13,850, up from $12,950.  For married couples filing jointly, it is $27,700 up from $25,900. For heads of households, the standard deduction is $20,800, up from $19,400.

Remember, you can’t take the standard deduction if you also itemize deductions. And for married couples filing separately, both spouses must take the same type of deduction. So, if one spouse chooses to itemize, the other spouse must as well.

Changes to Alternative Minimum Tax (AMT) Exemption Levels

When Congress passed the Tax Cuts and Jobs Act back in 2017, the number of Americans who owe the AMT has been drastically reduced. But in case you fall under this category, the exemption levels for 2023 are as follows:

Single Married, filing jointly
0 to $81,300 0 to $126,500

These exemption levels begin to phase out at $578,150 for single individuals, and $1,156,300 and $1,505,600 for married couples filing jointly.

We hope you found this information helpful. Obviously, it’s not a completely exhaustive list of every change for the 2023 tax year. But it is an overview of some of the most important ones. If you have any questions or concerns, please let us know. Our door is always open!

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