New for 2023: Contribution limits, tax brackets, key benefit changes & more


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
  1. Key tax changes
  2. Retirement contribution limits
  3. Income phase-out ranges for IRAs
  4. Health care and dependent care savings accounts
  5. Social Security
  6. 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%[i] 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

 

Download our Medicare guide

For more Medicare information, including the 2023 IRMAA brackets, read this guide. It will help you understand Medicare and the choices available to you.

 

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.