Personal Finance

Inflation boosted the 2023 federal income tax brackets. Here's how your taxes may compare to 2022


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After a year of soaring prices, the IRS made annual inflation adjustments for dozens of tax provisions, including the federal income tax brackets for 2023, which may affect next year’s taxes, experts say.

While the rates didn’t change, the brackets show the federal income taxes you’ll owe on each portion of your taxable income, which is calculated by subtracting the greater of the standard or itemized deductions from your adjusted gross income.

“This year’s annual adjustments are more significant than usual,” said Mark Steber, chief tax information officer at Jackson Hewitt, noting that “record-setting high inflation” contributed to the change.

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Steber said you’re likely to notice a difference on next year’s tax return.

The goal of yearly inflation adjustments is to offset “tax rate bracket creep,” he said, which happens when you owe more income taxes after wage increases without economic benefit due to inflation.

How the 2023 federal income tax brackets changed

There was roughly a 7% change in the federal income tax brackets from 2022 to 2023, said Kyle Pomerleau, senior fellow and federal tax expert with the American Enterprise Institute.

“That was a larger increase than usual,” he said. “And that is because inflation has been higher than usual,” explaining that inflation was “very modest” the decade prior to the pandemic.

How other tax provisions changed for 2023

How to prepare for 2023 tax bracket changes

IRS raises income threshold and standard deduction for all tax brackets



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