2023 Tax Changes: What You Need to Know for the Coming Year
As we approach the year 2023, it’s important to keep abreast of the major changes in tax laws that are expected to take place. With new legislation being drafted and old ones being revised, it’s critical to stay informed to avoid any potential pitfalls. In this article, we’ll provide you with a rundown of the most significant tax changes you’ll need to be aware of for the coming year.
Tax Brackets & Rates
One of the most significant changes to taxes in 2023 is the altering of tax brackets. These changes will undoubtedly affect everyone, regardless of income level. According to the latest figures, tax brackets will see an upward shift, with the highest tax category rate expected to increase from 39.6% to 42%. Additionally, the lowest tax category is expected to see a reduction in rate from 10% to 9%.
Standard Deductions
For taxpayers who prefer using standard deductions instead of itemizing, there is some good news. The increase in the standard deduction is expected to be up to $200 for single taxpayers and $400 for married taxpayers filing jointly. This will help many taxpayers who struggle to itemize meet the required deduction thresholds and reduce their taxable income.
Child Tax Credit
The Child Tax Credit is one of the most significant changes being made in 2023 that could positively impact many families. The maximum credit available will reportedly increase from $3,000 to $3,600, and this applies to children under the age of 6. Additionally, the age range for the credit will increase from 17 to 18 years old.
Retirement Savings
The changes tax laws are expected to make to retirement savings are likely a crowd pleaser. Firstly, maximum contribution limits for employees in 401(k), 403(b), and most 457 plans will be raised from $19,500 to $20,000. Secondly, for those who qualify for the saver’s credit, the maximum credit will be raised from $1,000 to $1,500. These changes will help Americans save more towards their retirement and reduce their taxable income.
Conclusion
In conclusion, the year 2023 will see some significant changes in tax laws, and they are expected to affect taxpayers across all income levels. It’s crucial to keep an eye on these changes to avoid any potential pitfalls, utilize benefits, and make informed decisions. Taking the time to understand them now can save you time, money, and a whole lot of headache later. Stay informed, stay ahead.
