The IRS has released its annual inflation adjusted tax numbers for 2023. Below we have highlighted some of the most relevant updates for tax brackets, retirement contributions, and estate and gifting limits, as compared to 2022 figures.

Individual Income Taxes
Income Tax Brackets – Single Tax Filer
2023 2022
10% Up to $11,000 Up to $10,275
12% $11,001 to $44,725 $10,276 to $41,775
22% $44,726 to $95,375 $41,776 to $89,075
24% $95,376 to $182,100 $89,076 to $170,050
32% $182,101 to $231,250 $170,051 to $215,950
35% $231,251 to $578,125 $215,951 to $539,900
37% Over $578,126 Over $539,900
Standard Deduction $13,850 $12,950
Long-Term Capital Gains
0% Up to $44,625 Up to $41,675
15% $44,626 to $492,300 $41,676 to $459,750
20% Over $492,300 Over $459,750
Income Tax Brackets – Married Filing Jointly
2023 2022
10% Up to $22,000 Up to $20,550
12% $22,001 to $89,450 $20,551 to $83,550
22% $89,451 to $190,750 $83,551 to $178,150
24% $190,751 to $364,200 $178,151 to $340,100
32% $364,201 to $462,500 $340,101 to $431,900
35% $462,501 to $693,750 $431,901 to $647,850
37% Over $693,750 Over $647,850
Standard Deduction $27,700 $25,900
Long-Term Capital Gains
0% Up to $89,250 Up to $83,350
15% $89,251 to $553,850 $83,351 to $517,200
20% Over $553,850 Over $517,200
Retirement Plan Contribution Limits
2023 2022
401(k), 403(b), 457 plans $22,500 $20,500
–   50+ catch up contribution $7,500 $6,500
IRA – Traditional & Roth $6,500 $6,000
–   50+ catch up contribution $1,000 $1,000
SIMPLE IRA $15,500 $14,000
–   50+ catch up contribution $3,500 $3,000
Defined Contribution Plan $66,000 $61,000
Gift & Estate Tax
2023 2022
Annual Gift Exclusion $17,000 $16,000
Federal Estate Tax & Gift Tax Exemption $12,920,000 $12,060,000
Maximum Transfer Tax Rate 40% 40%
Annual Gift Exclusion to Non-U.S. Citizen Spouse $175,000 $164,000

 

 

 

In addition to the tax figures above, the Net Investment Income Tax (NIIT) applies at a rate of 3.8% to certain net investment income of individuals, estates, and trusts that have income above the statutory threshold amounts. The threshold amounts are $200,000 for single tax-payers and $250,000 for married filing jointly.

While many of the brackets moved favorably in 2023, it should also be noted that the amount of income subject to Social Security payroll taxes increased from $147,000 to $160,200.

If you have any questions, please feel free to contact us or schedule a conversation.

Author:
Thomas Burleigh, CFP®, CTFA
Wealth Manager
Tom Burleigh, CFP, Wealth Manager

Disclosure:

This article does not contain any legal or tax advice. You should always consult with your attorney, accountant, or other professional advisors before changing or implementing any tax, investment, or estate planning strategy. This is not an offer or a solicitation to buy or sell securities. This may not be construed as investment advice and does not give investment recommendations. Any opinion included in this article constitutes the judgment of CMH Wealth Management, LLC as of the date of this report and are subject to change without notice. 

Additional information, including management fees and expenses, is provided on CMH Wealth Management, LLC’s Form ADV Part 2. Past performance is not a guarantee of future results.

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