IRS changes tax brackets, deductions to make up for inflation

LINCOLN, Neb. (KLKN) – Some major changes are coming to taxes in 2023 after the IRS released its adjustments for inflation.

According to Creighton University economics professor Ernie Goss, these changes will be positive for most people.

Prices have gone up over 8% in the last 12 months, and many Americans have taken a big hit because their wages haven’t kept up with inflation.

To help, the IRS has made some of the biggest changes in decades for the 2023 tax year.

“Inflation adjustment is greater than the wage adjustment, so most of the adjustments are going to be favorable,” Goss said.

Goss said people who changed jobs are likely to have had larger pay increases, so they won’t benefit as much as people who stayed in the same job with the same pay.

Let’s break down the guidelines for 2023.

The new standard deductions are going up about 7% for both single taxpayers and for married couples filing jointly.

For single filers, it’s an increase of $900. For couples, it’s $1,800.

The IRS is also boosting each tax bracket by about 7%.

For example, the 22% tax bracket for single filers started at $41,775 in 2022. In 2023, it will begin at $44,725.

This means that a married couple earning $200,000 in both 2022 and 2023 would save $900 in taxes in 2023 because more of their income would be taxed at a lower rate with the new tax brackets.

Goss said these are all good changes for the average American.

You also shouldn’t worry about understanding the new rules or taking action unless you do your own taxes.

If you have someone else prepare your taxes, they will handle the adjustments for you.

“It’s really not going to require anything from the individual to be cognizant of,” Goss said. “Although, it doesn’t hurt to always be aware of brackets and when you’re earning more and bringing home less. That’s always a pain, and you want to avoid that, of course.”

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