This year’s federal tax return filing deadline is Monday, April 15th – that means that you should take advantage of the time before Tax Day to review recent changes to the federal tax statutes. While there are minor alterations to tax regulations each year, the current tax year has brought a number of events that may impact millions of US taxpayers.
Have a complex tax situation affecting you or your business? Cg Tax, Audit & Advisory is here to help, with decades of experience in many specialized areas of accounting and a personal approach to fit your tax needs. Contact our tax accounting team now or read on to learn more about the most major changes for 2023 returns in the 2024 tax season.
What’s New for the 2023 Tax Year?
The biggest developments in federal taxes this year include:
- The Child Tax Credit applies to many dependents under age 17
- Widening of tax brackets and an increase of the standard deduction due to inflation adjustments
- Increased limits to various savings account contribution types
- Many people can access energy tax credits
- The estate tax exemption has increased
Child Tax Credit 2023 Details
The current child tax credit is $2,000 per dependent child under the age of 17, which phases out above $200,000 in taxable income if you’re filing individually or $400,000 if you’re married and filing jointly. Filers with other qualifying dependents can claim a $500 credit per dependent person. Remember that tax credits tend to be more favorable than deductions – this is because deductions just reduce the total of taxable income, while credits affect the tax you owe directly.
Current Tax Brackets and Standard Deduction
While there are still seven tax brackets for both single individuals and married couples filing jointly, and the rates for those brackets haven’t changed, the maximum amount of taxable income in each bracket has increased by 7%, as shown below:
Tax year 2023 marginal tax bracket for single filers
| Income Range | Tax Rate |
| $11,000 or less | 10% |
| $11,001 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% |
Tax year 2023 marginal tax bracket for those married and filing jointly
| Income Range | Tax rate |
| $22,000 or less | 10% |
| $22,001 to $89,450 | 12% |
| $89,451 to $190,750 | 22% |
| $190,751 to $364,200 | 24% |
| $364,201 to $462,500 | 32% |
| $462,501 to $693,750 | 35% |
| $693,751 or more | 37% |
Similarly, the standard deduction for people filing individually is $13,850, which is $900 more than last year, and married couples filing jointly get a standard deduction of $27,700, which is $1,800 greater than it was last year. Heads of households can use a $20,800 standard deduction, which is a $1,400 rise.
IRA and HSA Limits for 2023 Tax Returns
You can contribute up to $6,500 to traditional and Roth IRAs for the 2023 tax year, which is $500 greater than the 2022 limit. Those aged 50 and up are able to contribute an additional $1,000 under catch-up contribution regulations. Meanwhile, contribution limits to tax-deferred and Roth 401(k) accounts for 2023 have increased to $22,500, with those 50 and older able to contribute an extra $7,500.
Health savings account (HSA) contribution limits increased as well, albeit to a smaller degree. Individuals can contribute $3,850 to an HSA, which is a $50 increase, while families can put in up to $7,750, which is $100 greater than the previous year. People 55 and older can contribute an additional $1,000 in both cases.
Maximizing your contributions to pre-tax savings accounts is usually an easy and effective way to reduce your tax burden. And in many cases you can still make contributions in 2024 that count towards the 2023 tax year as long as you do so prior to filing your federal tax return.
Current Energy Tax Credit Guidelines
The federal government continues to offer advantageous tax breaks to those who purchase an electric vehicle or who undertake home renovations that improve energy efficiency. As the Inflation Reduction Act continues to be in effect, buyers of electric vehicles can get a credit of up to $7,500, while separate rebate programs offer some homeowners up to $8,000 for energy-efficiency upgrades like insulation and improved HVAC systems and up to $14,000 for installing energy-saving appliances.
Estate Tax Exemption for 2023 Returns
Since the estate and gift tax exemption is tied to inflation, the current limit is $12,920,000, which covers the vast majority of inheritances and cash gifts. Meanwhile, the annual gift exclusion, which is the amount of money that can be given per year with no tax liability or using up lifetime estate tax exemptions, is $17,000 per recipient, $1,000 greater than last year.
Get a Head Start on Your Taxes with Cg Tax, Audit & Advisory
No matter what credits and deductions you claim, your best move is always to start working on your tax returns early, so that you can file well before the deadline and get any refund you may be entitled to as quickly as possible. At Cg, we’re always on hand to assist you with state and federal tax filing – trust the team that’s been known for decades as one of the region’s top accounting firms. Get in touch with us today to start your tax preparation the right way.