Changes in Tax Rates for 2023

The IRS has issued Revenue Procedure 2022-38, which sets forth inflation-adjusted items for various provisions of the Internal Revenue Code which will be applicable in 2023. Here are some of the highlights:

Income Tax Adjustments. Below is the tax table applicable to married individuals filing joint returns (and “Surviving Spouses”), for tax years beginning after December 31, 2022:

If Taxable Income Is

The Tax Is

Not over $22,000

10% of the taxable income

Over $22,000 but not over $89,450

$2,200 plus 12% of the excess over $22,000

Over $89,450 but not over $190,750

$10,294 plus 22% of the excess over $89,450

Over $190,750 but not over $364,200

$32,580 plus 24% of the excess over $190,750

Over $364,200 but not over $462,500

$74,208 plus 32% of the excess over $364,200

Over $462,500 but not over $639,750

$105,664 plus 35% of the excess over $462,500

Over $693,750

$186,601 plus 37% of the excess over $693,750


By comparison, here is the rate table applicable for 2022:

If Taxable Income Is

The Tax Is

Not over $20,550

10% of the taxable income

Over $20,550 but not over $83,550

$2,055 plus 12% of the excess over $20,550

Over $83,550 but not over $178,150

$9,615 plus 22% of the excess over $83,550

Over $178,150 but not over $340,100

$30,427 plus 24% of the excess over $178,150

Over $340,100 but not over $431,900

$69,295 plus 32% of the excess over $340,100

Over $431,900 but not over $647,850

$98,671 plus 35% of the excess over $431,900

Over $647,850

$174,253.50 plus 37% of the excess over $647,850


Many people do not realize it, but when it comes to the tax rates applicable to net long-term capital gains (technically defined as “net capital gain”), a certain amount of long term capital gain (“LTCG”) may be eligible for a zero tax rate. Likewise, there is a maximum amount of LTCG that would be subject to what most people consider the “normal” LTCG rate of 15%. The zero rate amount for 2023 has increased to $89,250, while the 15% rate is capped at $553,850.

The standard deduction, in the case of married individuals filing joint returns, will move from $25,900 in 2022 to $27,700 in 2023 (the standard deduction for unmarried individuals (other than surviving spouses and heads of household) will be half that amount in 2023 -- $13,850). For tax years beginning in 2023, the additional standard deduction amount for those over age 65 or blind is $1,500, compared to $1,400  in 2022.

For taxable years beginning in 2023, a “high deductible health plan” means, for family coverage, a health plan with an annual deductible that is at least $5,300 and does not exceed $7,900, and under which annual out-of-pocket expenses (other than for premiums) for covered benefits do not exceed $9,650.

Estate and Gift Taxes.  What is commonly referred to as the “estate tax exemption amount” increases to $12,920,000 in 2023 (up from $12,060,000 in 2022). The limitation on “annual exclusion gifts” increases to $17,000 (up from $16,000 in 2022).

There are lots of other Code sections with various thresholds, caps and other limitations that are adjusted in Revenue Procedure 2022-38.

For a review of the complete document click this link:
Part III Administrative, Procedural, and Miscellaneous, 26 CFR 601.602 (irs.gov)

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