New IRS Tax Brackets for 2023

Parisi, Coan & Saccocio, PLLC

The standard deduction, tax brackets, and alternative minimum tax exemption amount are among the more than 60 tax provisions that will be adjusted annually for inflation beginning in tax year 2023 by the Internal Revenue Service. Most changes apply to tax returns filed in 2024.

You should be aware of the following important changes as a result of the IRS announcement:

  • The standard deduction for married couples filing jointly in tax year 2023, the standard deduction increases to $27,700, an increase of $1,800 from the previous year.
  • For tax year 2023, The standard deduction for single taxpayers and married individuals filing separately, the standard increases by $900 to $13,850.
  • For tax year 2023, the standard deduction for heads of households will be $20,800, an increase of $1,400 from the amount for tax year 2022.

2023 IRS Marginal Rates

The top tax rate for single taxpayers who earn more than $578,125 ($693,750 for married couples filing jointly) remains 37% for tax year 2023. The other rates are listed on the IRS website as:

  • 35% for incomes over $231,250 ($462,500 for married couples filing jointly).
  • 32% for incomes over $182,100 ($364,200 for married couples filing jointly).
  • 24% for incomes over $95,375 ($190,750 for married couples filing jointly).
  • 22% for incomes over $44,725 ($89,450 for married couples filing jointly).
  • 12% for incomes over $11,000 ($22,000 for married couples filing jointly).

For single people with incomes of $11,000 or less, the lowest rate is 10% ($22,000 for married couples filing jointly).

2023 IRS Alternative Minimum Tax

For the 2023 tax year, the Alternative Minimum Tax exemption is set at $81,300 and phases out starting at $578,150 ($126,500 for married couples filing jointly for whom the exemption phases out starting at $1,156,300). The exemption threshold for 2022 was $75,900, and it gradually decreased to $539,900 ($118,100 for married couples filing jointly, for whom the exemption gradually decreased to $1,079,800).

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