Rising costs across the United States throughout the pandemic leading into this year did not go unnoticed. Not only did the cost of goods and services go up, but so did tax rates. Employers are not all keeping up with the cost of living expenses increase in pay for their employees which could cause changes to their tax brackets for the upcoming year. As businesses and individuals are experiencing record-high increases in years, it’s important to consider what the year ahead will be like for their taxes.
Tax Preparation in 2023
Tax preparation season is nearing with only two months left to go in 2022. As your clients prepare for the upcoming tax season with you, you must share new, important information on what the next fiscal year will bring. Just released this past month, the IRS publicly notified of inflation adjustments that will begin in the 2023 tax year for taxes due in 2024. They have increased the standard deduction for all taxpayers…. quite a bit!
Here’s the breakdown of what your clients can expect:
- Married couples filing jointly: $27,700
- Single or Married filing couples filing separately: $13,850
- Heads of Household: $20,800
- The 10% tax bracket will apply to married couples filing jointly with a combined income of up to $22,000 & individuals with an income of up to $11,000
- The 12% tax bracket will apply to married couples filing jointly with a combined income over $22,000 & individuals with an income over $11,000
- The 22% tax bracket will apply to married couples filing jointly with a combined income over $89,450 & individuals with an income over $44,725
- The 24% tax bracket will apply to married couples filing jointly with a combined income over $190,750, or individuals with incomes over $95,375
- The 32% tax bracket will apply to married couples filing jointly with a combined income over $364,200, or individuals with incomes over $182,100
- The 35% tax bracket will apply to married couples filing jointly with a combined income over $462,500, or individuals with incomes over $231,250
- The 37% tax bracket will apply to married couples filing jointly with a combined income over $693,750, or individuals with incomes over $578,125
Make sure you are staying up to date on all of the latest tax news so that you can prepare your clients for what they will be facing with the upcoming tax year and the season ahead.
