Tax Inflation Adjustments for Tax Year 2023

The IRS makes tax adjustments for inflation every year, but in 2023, they are likely to be modest. The inflation adjustment will increase the value of some federal tax deductions and credits. Still, you may see a small change in your tax bill. Identifying which tax deductions and credits are affected by inflation can help you plan your tax return.

All the details can be found in IRS’s Revenue Procedure 2022-38PDF. This publication provides information about the changes, including the tax bracket changes. It is important to review this information before you file your taxes. You should be aware of the new rules and the new inflation rate.

Changes in Tax Brackets for 2023

The IRS is adjusting the tax code for 2023 to reflect inflation. These adjustments will affect many taxpayers and may result in tax savings next year. The IRS aims to prevent “bracket creep,” where inflation pushes people into higher tax brackets.

The IRS is also raising the standard deduction and making key tax provisions more affordable. The new standard deduction will increase by roughly 7%. This change will keep most people in a lower tax bracket in 2023 and may result in a smaller tax bill for many. As inflation continues to rise, these changes may affect some taxpayers who make a high salary.

While the federal marginal tax rates will remain unchanged in 2023, each tax bracket has been adjusted for inflation. For instance, the marriage penalty will not kick in until a taxpayer reaches the 37% tax bracket. Additionally, the limits for itemized deductions and the SALT cap have been maintained.

Marginal Tax Brackets For Tax Year 2023, Married Filing Jointly

Taxable income	Taxes owed
$22,000 or less	10% of the taxable income
$22,001 to $89,450	$2,200 plus 12% of amount over $22,000
$89,451 to $190,750	$10,294 plus 22% of amount over $89,450
$190,751 to $364,200	$32,580 plus 24% of amount over $190,750
$364,201 to $462,500	$74,208 plus 32% of amount over $364,200
$462,501 to $693,750	$105,664 plus 35% of amount over $462,500
$693,751 or more	$186,601.50 plus 37% of amount over $693,750

Marginal Tax Brackets For Tax Year 2023, Single Filers

Taxable income	Taxes owed
$11,000 or less	10% of the taxable income
$11,001 to $44,725	$1,100 plus 12% of amount over $11,000
$44,726 to $95,375	$5,147 plus 22% of amount over $44,725
$95,376 to $182,100	$16,290 plus 24% of amount over $95,375
$182,101 to $231,250	$37,104 plus 32% of amount over $182,100
$231,251 to $578,125	$52,832 plus 35% of amount over $231,250
$578,126 or more	$174,238.25 plus 37% of amount over $578,125