HOUSTON — It’s not every day that the Internal Revenue Service shares good news: Starting in 2023, the IRS will let Americans keep more of their income due to inflation.
Since tax rates are automatically adjusted for inflation, there will be a higher cutoff for all seven income tax brackets and a higher standard deduction when you file your tax return.
The income thresholds for the top tax rate, 37%, are going up 7% from this year. Plus, the standard deduction will see the largest increase since 1985.
The standard deduction for married couples will rise by $1800 and by $900 for individuals.
The inflation adjustment is for 2023 so you won’t see those changes until 2024.
Did you miss tax credits?
In other IRS news, nine million Americans are being sent letters because they might be missing out on COVID-19-related tax credits. Many may not be aware that they can still claim the 2021 Recovery Rebate Credit, the Child Tax Credit and the Earned Income Tax Credit.
Millions of low-income Americans don’t appear to be taking advantage of the temporary tax provisions that Congress approved during the pandemic.
Starting this week, those letters will provide instructions about filing even if they missed the April deadline. The last day to take action on the tax credits is November 17 of this year.