Projected 2023 federal tax brackets and other inflation-adjusted amounts

Wolters Kluwer, Inc. has projected federal tax brackets and other inflation-adjusted amounts for the 2023 tax year.

Highlights of projected 2023 amounts, including tax brackets for ordinary income and capital gains tax, can be downloaded at the following link:

2023 Projections for Inflation-Adjusted Tax Brackets and Other Amounts

Projected inflation-adjusted amounts for the 2023 tax year

Beginning with tax year 2018, most inflation adjustments replaced the Consumer Price Index with the Chained Consumer Price Index, as the Tax Cuts and Jobs Act required. The change in the calculation is highly technical, but the end result is much smaller increases in inflation adjustments. Despite that, historically high inflation at the end of 2021 and throughout 2022 has led to increases in tax-related amounts far larger than seen in decades.

On September 13, 2022, the Bureau of Labor Statistics released Consumer Price Index amounts for August 2022, enabling the calculation of 2023 amounts.

New inflation-adjusted items under the Tax Cuts and Jobs Act

In addition to changing how inflation adjustments are calculated, the Tax Cuts and Jobs Act also produced a number of new items to adjust annually. These include:

• Threshold amounts for the Section 199A qualified business income deduction, which for 2023 are projected to be $364,200 for joint filers and $182,100 for single filers
• Gross income ceiling for corporations and partnerships to use the cash method of accounting, which for 2023 is projected to be $29,000,000

The personal exemption amount for 2023 is projected to be $4,700.

While the Tax Cuts and Jobs Act eliminated the personal exemption deduction, the personal exemption amount is still used in a number of instances, such as the qualifying relative test for head of household filing status, and a qualified disability trust’s deduction in lieu of a personal exemption.

Official inflation adjustments for the 2023 tax year

The IRS should release official amounts for the 2023 tax year in late October or early November. Cost of living adjustments for retirement planning are based on a different set of numbers released by the Bureau of Labor Statistics and are typically released in late October. Amounts for the 2022 tax year were released on November 10, 2021.

Download your free copy of the 2023 Projections for Inflation-Adjusted Tax Brackets and Other Amounts.