2023 Tax Update

Tax rates change annually. These are the updates for 2023.

2023 income tax brackets

For individuals, taxable income over…

$1	10%
$11,000	12%
$44,725	22%
$95,375	24%
$182,100	32%
$231, 250	35%
$578,125	37%

For married couples filing joint returns, taxable income over…

$1	10%
$22,000	12%
$89,450	22%
$190,750	24%
$364,200	32%
$462,500	35%
$693,750	37%

For heads of households, taxable income over…

$1	10%
$15,700	12%
$59,850	22%
$95,350	24%
$182,100	32%
$231,250	35%
$578,100	37%

2023 Standard Deduction

Filing as	Under 65	Age 65 +
Individuals	$13,850	$15,700
Married filing joint	$27,700	$29,200*
Head of household	$20,800	$22,650

*If both persons are age 65 or over, then the standard deduction is $30,700.

2023 Long-term capital gains rates

#LTCG

For unmarried individuals, taxable income over…

$1	0%
$44,625	15%
$200,000	18.8%*
$492,300	23.8%*

*Includes 3.8% net investment income tax

For married individuals filing joint returns, taxable income over…

$1	0%
$89,250	15%
$250,000	18.8%*
$553,850	23.8%*

*Includes 3.8% net investment income tax

For heads of household, taxable income over…

$1	0%
$59,750	%15
$200,000	18.8%*
$523,050	23.8%*

*Includes 3.8% net investment income tax

2023 IRA contribution limits

#IRA

Under age 50	$6,500
Age 50 or over	$7,500

Traditional and Roth IRA contribution limits

Depending upon whether or not you and your spouse have a retirement plan at work, your IRA contribution may not be tax deductible and a Roth contribution might not be possible. See hereafter.

When do you have to take your required minimum distribution (RMD)?

2023 Traditional IRA deductible contribution income limits

#DEDUCTIBLE

Covered by a plan at work…

Single or Head of Household…	….and your Modified AGI is…	…then you can take…
	$73,000 or less	full deduction
	in between	partial deduction
	$83,000 or more	no deduction
Married filing jointly or qualifying widower…	…and your Modified AGI is…	…then you can take…
	$116,000 or less	partial deduction
	in between	partial deduction
	$136,000 or more	no deduction

Follow this chart if you do have a retirement plan at work

Not covered by a plan at work…

Single, Head of Household or Qualifying Widower	Regardless of your income…	…you can take a full deduction
Married with a spouse who does not have a plan at work	Regardless of your income…	…you can take a full deduction
Married with a spouse who does have a plan at work …	…and your Modified AGI is…	…then you can take…
	$218,000 or less	full deduction
	in between	partial deduction
	$228,000 or more	no deduction

Follow this chart if you don’t have a retirement plan at work

2023 Roth IRA contribution income limits

#Roth

Roth IRA contributions, but not Roth conversions, are limited by income.

2022 income	Single	Married Filing Jointly
May make a full Roth contribution	$138,000 or less	$218,000 or less
Contribution gradually reduced	in between	in between
Not eligible	$153,000 or more	$228,000 or more

Maximum income for Roth contributions

2023 SEP and Simple IRA contribution limits

#SEP

SEP IRAs and Simple IRAs allow larger contributions than IRAs, but as discussed in the book, require rules to be followed.

SEP	$66,000
Simple	$15,500

The Simple IRA allows another $3,500 contribution if you are over age 50.

2023 401k contribution limits

#401K

Employee	$22,500
Max including employer	$66,000
Over age 50 “catch up” amount	$7,500
Highly-compensated employee, income above	$150,000

Over age 50? Max employee contribution is increased by $7,500. The total employee contribution is $30,000 and employer plus employee is $73,500.

2023 estate tax and gift tax

#ESTATE

The estate tax exemption is:

Unmarried individuals	$12.92 million
Married couples	$25.84 million

These limits expire in 2025.

The annual gift tax exclusion is $17,000.

Charitable Contributions

#charity

Donating to Charity:

Charitable deduction for everyone	$300
% of AGI for qualifying charity	50%
% of AGI for non-qualifying charity	30%

Qualified Charitable Distribution, or QCD, from an IRA to a charity. In 2023, the limit is $100,000.

2023 Social Security and Medicare Taxes

#FICA

These are also called FICA taxes, or payroll taxes.

Maximum earnings subject to Social Security Tax (OASDI):	$160,200
OASDI tax rate	12.4%
Max earnings subject to Medicare tax	no cap
Medicare tax rate	2.9%

Self-employed people pay all of it: 15.3%. Or, for employees, they pay half, employers pay half.

Medicare surtax (IRMAA) in 2023

#IRMAA

2021 modified adjusted gross income above….

Single	MFJ	MF Separate	2022 Part B Premium	Part D surtax
$1	$1	$1	$164.90	$0
$97,000	$194,000	$97,000	$230.80	$12.20
$123,000	$246,000		$329.70	$31.50
$153,000	$306,000		$428.60	$50.70
$183,000	$366,000		$527.50	$70.00
$499,999	$749,999	$403,000	$560.50	$76.40

Income earned two years ago forces a monthly Medicare surtax for two years.

2023 HSA, HRA and FSA

#HSA

Health savings accounts, health reimbursement accounts and flexible spending accounts; here are the contribution limits for 2023.

HSA annual contribution individual	$3,850
HSA annual contribution family	$7,750
HSA over age 55 catch-up	$1,000
QSEHRA annual contribution limit individual	$5,850
QSEHRA annual contribution limit family	$11,800
FSA contribution limit	$3,050
Dependent care FSA contribution limit	$5,000

QSEHRA: Small business HRA (health reimbursement arrangement)

To get a tax-deduction for an HSA contribution, then you must have a high deductible health insurance plan. Here are the minimum deductibles for 2023:

Min. HSA individual deductible	$1,500
Min. HSA family deductible	$3,000

Also, an HSA approved insurance plan must have a maximum out of pocket cost that does not exceed $7,500 or $15,000 for individuals and families.

Contact an AIWM Financial Planner

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