Every year, federal agencies like the Internal Revenue Service and Social Security Administration assess the impact of inflation and the current environment on their areas of oversight. Sometimes, this results in federal benefit program changes, tweaks to tax rules and adjustments to tax-advantaged plans that are regulated by law.
To help you plan for the new year, here is a roundup of key 2023 changes that could affect how you save, spend and invest. As you review these new numbers, know that we’re on top of these annual changes, and others, and are available to discuss how we can adjust your financial plan accordingly.
And please note: This article is intended to be a summary of changes for 2023 and does not detail all modifications implemented by the federal government this year, nor any changes from the recently passed SECURE Act 2.0. Please reach out to me if you have any specific questions.
In this article
-
Key tax changes
-
Retirement contribution limits
-
Income phase-out ranges for IRAs
-
Health care and dependent care savings accounts
-
Social Security
-
Medicare
Key tax changes
Inflation has prompted the IRS to raise income thresholds for all tax brackets and increase the standard deduction.
Income tax brackets — for taxable income in 2023
Income thresholds for tax brackets will increase by approximately 7% for 2023. Taxable income is calculated by subtracting your deductions from your adjusted gross income.
|
Tax bracket
|
Single
|
Married filing jointly
|
Head of household
|
Married filing separately
|
|
10%
|
$0 –
$11,000
|
$0 –
$22,000
|
$0 –
$15,700
|
$0 –
$11,000
|
|
12%
|
$11,001 –
$44,725
|
$22,001 –
$89,450
|
$15,701 –
$59,850
|
$11,001 –
$44,725
|
|
22%
|
$44,726 –
$95,375
|
$89,451 –
$190,750
|
$59,851 –
$95,350
|
$44,726 –
$95,375
|
|
24%
|
$95,376 –
$182,100
|
$190,751 –
$364,200
|
$95,351 –
$182,100
|
$95,376 –
$182,100
|
|
32%
|
$182,101 –
$231,250
|
$364,201 –
$462,500
|
$182,101 –
$231,250
|
$182,101 –
$231,250
|
|
35%
|
$231,251 –
$578,125
|
$462,501 –
$693,750
|
$231,251 –
$578,100
|
$231,251 –
$346,875
|
|
37%
|
$578,126+
|
$693,751+
|
$578,101+
|
$346,876+
|
Please note: The tax brackets above are for the 2023 tax year. They are not used to calculate 2022 taxes.
General standard deduction
|
Filing status
|
2022
|
2023
|
|
Single
|
$12,950
|
$13,850
|
|
Married filing jointly
|
$25,900
|
$27,700
|
|
Head of household
|
$19,400
|
$20,800
|
|
Married filing separately
|
$12,950
|
$13,850
|
Additional standard deduction for those 65+ or blind
|
Filing status
|
2022
|
2023
|
|
Single / head of household
|
$1,750
|
$1,850
|
|
Married (joint, separate) or surviving household
|
$1,400
|
$1,500
|
Dependent standard deduction
|
|
2022
|
2023
|
|
Dependent with investment income only
|
$1,150
|
$1,250
|
|
Dependent with earned income
|
$1,150 – $12,950
|
$1,250 – $13,850
|
Estate tax exclusion amounts
|
2022
|
2023
|
|
$12.1 million
|
$12.9 million
|
Gift tax – annual exclusion
|
2022
|
2023
|
|
$16,000
|
$17,000
|
Retirement contribution limits
401(k), 403(b), 457 plan, Thrift Savings Plan
|
|
2022
|
2023
|
|
Elective deferral limit
|
$20,500
|
$22,500
|
|
Additional catch-up amount for employees 50+
|
$6,500
|
$7,500
|
SIMPLE retirement plans
|
|
2022
|
2023
|
|
Elective deferral limit
|
$14,000
|
$15,500
|
|
Additional catch-up amount for individuals 50+
|
$3,000
|
$3,500
|
IRAs (traditional IRAs and Roth IRAs)
For 2023, the total contributions you can make to any IRA (traditional or Roth) can’t be more than the following limits:
|
|
2022
|
2023
|
|
Individuals
|
$6,000
|
$6,500
|
|
Additional catch-up amount for individuals 50+*
|
$1,000
|
$1,000
|
*Note: IRA catch-up limit is not subject to an annual cost-of-living adjustment.
Income phase-out ranges for Roth and Traditional IRAs
The following are the modified adjusted gross income (MAGI) phase-out ranges for Roth IRAs and traditional IRAs.
MAGI phase-out range — for making contributions to Roth IRAs
|
|
2022
|
2023
|
|
Single/head of household
|
$129,000 –
$144,000
|
$138,000 –
$153,000
|
|
Married couple filing jointly
|
$204,000 –
$214,000
|
$218,000 –
$228,000
|
|
Married individual filing a separate return who makes contributions to a Roth IRA
|
No change.
|
The phase-out range is not subject to an annual cost-of-living adjustment and remains between $0 and $10,000.
|
MAGI phase-out range — for making deductible contributions to Traditional IRAs
|
|
2022
|
2023
|
|
Single/head of household
|
$68,000 –
$78,000
|
$73,000 –
$83,000
|
|
Married couple filing jointly
|
$109,000 –
$129,000
|
$116,00 –
$136,000
|
|
Individual not covered by a workplace retirement plan but is married to someone who is covered
|
$204,000 –
$214,000
|
$218,000 –
$228,000
|
|
Married individual filing a separate return who is covered by a workplace retirement plan
|
No change.
|
Phase-out range is not subject to an annual cost-of-living adjustment and remains between $0 and $10,000.
|
Health care and dependent care account contribution limits
Health Savings Accounts (HSA)
|
|
2022
|
2023
|
|
Individual
|
$3,650
|
$3,850
|
|
Family
|
$7,300
|
$7,750
|
|
Catch up (for those 55+)*
|
$1,000
|
$1,000
|
*Note: Catch-up amounts are not indexed to inflation.
Health care Flexible Spending Accounts (FSA)
| |
2022 |
2023 |
| Maximum |
$2,850 |
$3,050 |
| Carryover maximum |
$570 |
$610 |
Social Security
The coming year brings a large cost of living adjustment (COLA) for Social Security. Benefits will jump 8.7%1 for approximately 70 million Americans in 2023. According to the Social Security Administration, benefits will increase by an average more than $140 per month starting in January, affecting approximately 70 million Americans.1
|
|
2022
|
2023
|
|
COLA benefit increase
|
5.9% increase2
|
8.7% increase
|
|
Maximum earnings subject to Social Security tax
|
$147,000
|
$160,200
|
Earnings limitations for retirees
Some retirees who have begun to collect Social Security retirement benefits choose to continue working. Individuals who are younger than full retirement age, collecting Social security retirement benefits, and continuing to work, will have some or all their Social Security benefits reduced if they earn more than certain dollar amounts.
|
|
2022
|
2023
|
|
Earnings limit for workers who are younger than full retirement age (benefits reduced $1 for each $2 over the earnings limit)
|
$19,560
|
$21,240
|
|
Earnings limit for people in the year they reach their full retirement age in 2023, but before the month of full retirement age (benefits reduced $1 for each $3 over the earnings limit)
|
$51,960
|
$56,520
|
Medicare
Medicare Part B premium and deductible amounts
|
|
2022
|
2023
|
|
Standard monthly premium
|
$170.10
|
$164.90
|
|
Annual deductible for all beneficiaries
|
$233
|
$226
|
Medicare Part A deductible and coinsurance amounts
|
|
2022
|
2023
|
|
Inpatient hospital deductible
|
$1,566
|
$1,600
|
|
Daily coinsurance for days 61-90
|
$389
|
$400
|
|
Daily coinsurance for lifetime reserve days
|
$778
|
$800
|
We’re always monitoring the regulatory environment
At Ameriprise, we have legal and tax professionals constantly monitoring the regulatory environment for the benefit of our clients. Know that we are keeping track of these changes and can walk you through the best way to take advantage of these adjustments considering your financial goals.