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2023 Key Financial Planning Updates

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1. For 2023, there is no limitation on itemized deductions, as that limitation was eliminated by the Tax Cuts and Jobs Act, beginning in 2018.


2. For tax year 2023, the top tax rate remains 37% for individual single taxpayers with incomes greater than $578,125 ($693,750 for married couples filing jointly).


3. Alternative Minimum Tax, the 2022 exemption amount is $75,900 and began to phase out at $539,900 ($118,100 for married couples filing jointly for whom the exemption started to phase out at $1,079,800).


4. 2023 Earned Income Tax Credit amount is $7,430 for qualifying taxpayers who have three or more qualifying children, up from $6,935. See the reference from the table providing the maximum EITC amount for income thresholds and phase-outs.


5. In 2023, to qualify as a qualified small employer health reimbursement arrangement, the arrangement must provide that the total amount of payments and reimbursements for any year cannot exceed $5,850 ($11,800 for family coverage).


6. Estates of decedents who die during 2023 have a basic exclusion amount of $12.9 million, up from just over $12 million for estates of decedents who died in 2022.


7. The annual exclusion for gifts increases to $17,000 for the calendar year 2023, up from $16,000 for the calendar year 2022.


8. Marginal Rates: For the tax year 2023, the top tax rate remains 37% for individual single taxpayers with incomes greater than $578,125 ($693,750 for married couples filing jointly). The other rates are:

  • 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).


Reference: www.irs.gov/newsroom/irs-provides-tax-inflation-adjustments-for-tax-year-2023


 

Disclaimer:


Past performance is no guarantee of future results. Any views or opinions expressed do not reflect the firm as a whole. Inherent in any investment is the potential for loss. The material is provided for informational purposes only, and nothing herein constitutes investment, legal, accounting, tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is given on whether any investment suits a particular investor. It should not be assumed that any investments in securities, companies, sectors, or markets identified and described were or will be profitable. We believe that any statements regarding the market or other financial information obtained from our suppliers' sources are reliable. Still, we do not warrant or guarantee the timeliness or accuracy of this information. Neither our information providers nor we shall be liable for any errors or inaccuracies, regardless of cause, lack of timeliness, or delay or interruption in the user's transmission. All information is subject to change without notice.

 

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