Due to the highest inflation rate we have seen in several decades, major increases on tax items will likely be coming soon, according to Bloomberg Tax research.
The forecasts of Bloomberg tax are predicting that inflation-adjustment amounts in the Tax Code will increase by roughly 7.1% from last year. This is more than two times higher than the increase that happened in 2022. Several key deductions that taxpayers take advantage of year after year are also expected to go through large year-over-year increases. The foreign earned income exclusion has increased $8,000, growing to $120,000 from $112,000 last year, and the annual exclusion for gifts is increasing $1,000 from $16,000 last year to $17,000 this year.
Getting to The Numbers
In a statement made by the Vice President of analysis and content of Bloomberg Tax Heather Rothman, she said, “We Predict that inflation-adjusted amounts in the tax code will increase significantly in 2023 compared to prior years due to the economic environment. Taxpayers and advisors can use our projections to begin their 2023 tax planning before the IRS publishes the official 2023 inflation-adjusted amounts later this year.
Projected 2023 Tax Rate Bracket Income Ranges
Married Filing Jointly and Surviving Spouses
- 10% – $0 to $22,000
- 12% – $22,000 to $89,450
- 22% – $89,450 to $190,750
- 24% – $190,750 to $364,200
- 32% – $364,200 to $462,500
- 35% – $462,500 to $693,750
- 37% – $693,750 or More
Unmarried Individuals (Other than Surviving Spouses and Heads of Households)
- 10% – $0 to $11,000
- 12% – $11,000 to $44,725
- 22% – $44,725 to $95,375
- 24% – $95,375 to $182,100
- 32% – $182,100 to $231,250
- 35% – $231,250 to $578,125
- 37% – $578,125 or more
Projected 2023 Standard Deductions
- Married Filing Jointly/ Surviving Spouses
Alternative Minimum Tax Exemption Amount: $126,500
- Unmarried Individuals
AMT Exemption Amount: $81,300
- Married Filing Separately
AMT Exemption Amount: $63,250
- Estates and Trusts
AMT Exemption Amount : $28,400
Wrap-Up
While these numbers are not set in stone, the Bloomberg Tax Report gives us great insight into what we can predict this upcoming tax season. This is all still speculation as we are waiting for the IRS to release its official numbers for this coming tax year. If you’re concerned about how these changes may affect you, please get in contact with us to discuss this today!