Bloomberg Tax has released its projections of the IRS's inflation-adjusted tax rates for the coming tax season.
Accounting Today reported that, according to these projections—based on the latest inflation figures released by the U.S. Department of Labor’s Bureau of Labor Statistics—inflation-adjusted amounts will increase by 7.1 percent over last year. Bloomberg Tax also projected that the foreign earned income exclusion will increase from $112,000 to $120,000 and the annual exclusion for gifts will increase to $17,000 from $16,000.
There are other changes as a result of the Inflation Reduction Act, including an increase in the deduction for energy- efficient commercial buildings if certain requirements are met.
"We predict that inflation-adjusted amounts in the tax code will increase significantly in 2023 compared to prior years due to the economic environment,” said Heather Rothman, vice president for Analysis & Content at Bloomberg Tax. “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.”
Bloomberg predicted the following changes in individual income tax rate brackets and standard deductions:
Married Filing Jointly and Surviving Spouses
|
2022 Tax Rate Bracket Income Ranges
| Projected 2023 Tax Rate Bracket Income Ranges
|
10% - $0 to $20,550
| 10% - $0 to $22,000
|
12% - $20,550 to $83,550
| 12% - $22,000 to $89,450
|
22% - $83,550 to $178,150
| 22% - $89,450 to $190,750
|
24% - $178,150 to $340,100
| 24% - $190,750 to $364,200
|
32% - $340,100 to $431,900
| 32% - $364,200 to $462,500
|
35% - $431,900 to $647,850
| 35% - $462,500 to $693,750
|
37% - $647,850 or more
| 37% - $693,750 or more
|
Unmarried Individuals (other than Surviving Spouses and Heads of Households)
|
2022 Tax Rate Bracket Income Ranges
| Projected 2023 Tax Rate Bracket Income Ranges
|
10% - $0 to $10,275
| 10% - $0 to $11,000
|
12% - $10,275 to $41,775
| 12% - $11,000 to $44,725
|
22% - $41,775 to $89,075
| 22% - $44,725 to $95,375
|
24% - $89,075 to $170,050
| 24% - $95,375 to $182,100
|
32% - $170,050 to $215,950
| 32% - $182,100 to $231,250
|
35% - $215,950 to $539,900
| 35% - $231,250 to $578,125
|
37% - $539,900 or more
| 37% - $578,125 or more |
Standard Deduction
Filing Status
| 2022 Standard Deduction
| Projected 2023 Standard Deduction
|
Married Filing Jointly/Surviving Spouses
| $25,900
| $27,700
|
Heads of Household
| $19,400
| $20,800
|
All Other Taxpayers
| $12,950
| $13,850 |
In addition to individual tax brackets, the report includes projections for the following:
Projected penalty amounts:
• Failure to file personal and business tax returns
• Failure to file correct information returns
• Failure to furnish correct payee statements
• Failures relating to the preparation of tax returns for other persons
Projected retirement planning figures:
• Income limits for Roth IRA contribution eligibility
• Deduction limits for qualified retirement savings contributions
Hundreds of other amounts necessary to calculate clients’ taxes:
• Thresholds for calculating qualified business income deduction
• Alternative minimum tax thresholds
• Estate tax exemption amount
• Annual gift tax exclusion amount
• Deduction limits for health and medical savings accounts
The full report can be downloaded, free of charge, here.