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2022 Vs. 2023 Tax Brackets: Higher Income Thresholds For 2023

Income Tax Brackets [Photo: Dreamstime]
Income Tax Brackets [Photo: Dreamstime]

In comparison to the 2022 tax brackets, the income thresholds for 2023 have increased generously. The amounts have increased by more than 7% compared with the 3% increase in 2022.

Federal Income Taxes [Photo: Debt.org]

Federal Income Taxes [Photo: Debt.org]

In comparison to 2022, the income thresholds for the federal tax brackets have increased generously in 2023. The amounts have reportedly increased by more than 7% compared to the 3% in 2022. However, these changes are not actually uncommon. This is because the Internal Revenue Service (IRS) usually adjusts the tax brackets for the annual inflation. Nonetheless, taxpayers can avoid the tax bracket creep this year and will pay lower taxes in the long run.

According to Cruz-Martinez, the head of tax at Betterment financial advisory company, Eric Bronnenkant, says that the purpose of adjusting the tax brackets is to reduce the impact of inflation. This means that taxpayers whose salaries cannot keep up with the inflation can still avoid the tax bracket creep. The Tax Foundation says that tax bracket creep happens when inflation forces a taxpayer into a higher income tax bracket. This incident will reduce a taxpayer’s tax deductions, credits, and exemptions.

READ ALSO: Up To $10,000 Student Loans, Tuition Can Be Paid Under South Carolina’s 529 College Savings Plan

Changes to Federal Tax Brackets in 2023

According to Mengle, there are seven federal tax brackets: 10%, 12%, 22%, 24%, 32%, 35%, and 37%. One’s tax bracket will be determined by their taxable income and status of filing. The tax brackets also show what tax rate will have to be paid on each portion of income.

Taxable Rate Bracket for Single Taxpayers Bracket for Joint Taxpayers
10% $11,000 or less $22,000 or less
12% $11,001 to $44,725 $22,001 to $89,450
22% $44,726 to $95,375 $89,451 to $190,750
24% $95,376 to $182,100 $190,751 to $364,200
32% $182,101 to $231,250 $364,201 to $462,500
35% $231,251 to $578,125 $462,501 to $693,750
37% $578,126 or more $693,751 or more

READ ALSO: Free Electronic Filing For State Income Taxes Offered In Oregon

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