The IRS has some good news for Americans struggling with rampant inflation: You may get to keep more of your money in 2023.
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Due to the increasing costs of food, gas and utilities — the highest spikes in 40 years, per NPR — the government is offering a bit of a reprieve. The IRS is not only adjusting the tax brackets for millions of Americans as of 2023 (upping them by roughly 7%, according to The New York Times), but also increasing the standard deductions that can be taken, thereby reducing a person’s taxable income.
While the government looks at adjustments on an annual basis, the latest tax update is relatively significant, and will likely affect people in all income tax brackets, NPR indicated. In fact, as GOBankingRates previously reported, the 2022 adjustment for inflation was just 3.1%, making the 2023 updates over twice the size.
Here’s how those standard deduction increases break down:
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Single taxpayers (and married spouses filing separately) will have a standard deduction of $13,850 (a $900 increase).
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Married couples filing jointly will have a standard deduction of $27,700 (a $1,800 increase).
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Heads of households will have a standard deduction of $20,800 (a $1,400 increase).
The standard deduction is a “specific dollar amount that reduces the amount of income on which you’re taxed” according to the IRS.
