Due to the rampant inflation, the Internal Revenue Service announced on Tuesday that it has adjusted tax code parameters for 2023, which means that many Americans could end up taking home more money from their paychecks next year.
With inflation at a 40-year high, the IRS is hiking the standard deduction by about 7 percent for 2023, The Hill reported.
The standard deduction reduces the amount of income that a person is taxed so by increasing the standard deduction, the adjustment means Americans can protect more of their personal income from basic income taxes, the Wall Street Journal reported.
According to the IRS news release on Tuesday, the standard deduction for married couples who filed jointly will rise by $1,800 in 2023.
So married couples will have a standard deduction of $27,700 in 2023. In 2022 it was $25,900.
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The standard deduction for individuals filing on their own will go up by $900 in 2023, to $13,850, the IRS reported.
Heads of households will have a standard deduction of $20,800 in 2023, which is a $1,400 increase from 2022, the IRS added.
Meanwhile, the IRS also outlined the marginal tax rate bracket, and “the top tax rate remains 37% for individual single taxpayers with incomes greater than $578,125 ($693,750 for married couples filing jointly).”
The rest of the income bracket’s marginal 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),” the IRS news release outlined.
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These changes, particularly the standard deduction adjustment, are a reflection of the serious impact that Americans are suffering due to inflation and are meant to shield taxpayers from inflationary tax increases, the Journal reported.
Every year, the IRS makes small adjustments to the tax parameters, according…
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