Usually when anyone brings up the IRS, there’s an awkward moment of silence. Wallets start to throb in pain, stomachs become queasy, and a feeling of dread overwhelms the body. However, today, there’s some good news regarding the IRS.
Because inflation is running so high and making life a lot more expensive, the IRS is going to increase the standard deductions for singles and couples for 2023. These will affect everyone when you pay your taxes in 2024 and will probably give people a higher paycheck next year. When it comes to deductions:
- Married couples: $1,800 increase to $27,700
- Singles: $900 increase to $13,850
The IRS is also adjusting their tax brackets by 7% from last year’s numbers so people might fall into a lower tax bracket next year and not have to pay as much in taxes. This means that millions of people will have higher paychecks — which is always nice! Here’s the breakdown:
- $11,000 or less: 10% marginal rate
- $11,000 to $44,725: 12%
- $44,726 to $95,375: 22%
- $95,376 to $182,100: 24%
- $182,101 to $231,250: 32%
- $231,251 to $578,125: 35%
- $578,126 or more: 37%
Why Are They Doing This?
Inflation is hitting all Americans in a bad way. Whether they are buying gas, groceries, clothing, or electronics, the price of everything has gone up 8.2% since the same time in September.
This adjustment will hopefully help all hard-working Americans deal with rising inflation, interest, and the real estate market. Right now, people are losing purchasing power and in the next year, many economists have said there might be a recession. This could affect jobs, financial security, and also create a huge amount of credit card debt.
How Can You Get the Most Out of This?
In the end, we hope that this adjustment helps everyone deal with the upcoming economic uncertainty and be able to have more cash at hand. In general, it is recommended to have a full understanding of all the things you can write off for tax season like business supplies, food, transportation, medical bill, and more on the IRS Credits and Deductions page.
Also, it is a good idea to keep all your receipts for everything and then add them into a free accounting software program like Wave, Zipbooks, or Akaunting. This way you will have all your deductions added up, and it can easily be used to help you file your taxes by yourself or with the help of an accountant.