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Estate, Gift and Income Tax Amounts Increase for 2023

Published on: Dec 07 2022

The IRS announced the annual inflation increases for various tax provisions that take effect January 1, 2023. The lifetime estate and gift tax exemp- tion increases to $12.92 million (from $11.7 million). A couple can jointly exclude $25.84 million. Gifts of up to $17,000 can be made to any person without being included in 2023’s taxable gifts (up from $16,000 in 2022 and $15,000 in 2021).

The standard deduction for married couples filing jointly is $27,700 (up from $25,100). For single taxpayers, it is $13,850, up from $12,550. Remember, the personal exemption amount was eliminated for years after 2017. The top tax rate of 37% begins at taxable income exceeding $693,750 for married couples filing jointly, or $578,125 for singles. The 24% bracket begins with taxable income of $190,750 for married couples, or $95,375 for singles.

The 22% tax rate begins with taxable income of $89,450 for couples, or $44,725 for singles. The 0% long-term capital gains tax rate applies to married couples filing jointly until income exceeds $89,250, or $44,625 for singles.

The maximum annual tax-deferred contribution to 401(k) and similar plans increases to $22,500 from $20,500. The catch-up contribution for those ages 50 and older rises to $7,500. Total contribu- tions to 401(k) plans (including em- ployer and after-tax contributions) are limited to $66,000.

The contribution limit for both tradi- tional and Roth IRAs increases to $6,500. If you contribute to both types of IRAs, the aggregate contributions can’t exceed $6,500. The catch-up IRA contribution for taxpayers aged 50 and over isn’t indexed for inflation and remains at $1,000.

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