Major Tax Changes for 2023
Taxes • Accounting • Advisory • Assurance
Will the changes have any effect on your tax return?
Retirement/Pensions Plans
IRA: For year 2023, a qualified individual who would be at least 50 years old by the end of the tax year is allowed to make an additional “catch-up” contribution to a conventional or Roth IRA in the amount of $1,000. If a qualified individual will become 50 years old before the end of a calendar year, the individual’s age will be considered to be 50 as of January 1 of that tax year. For 2023, you could still be able to take a full IRA deduction if you were covered by a retirement plan and your 2023 modified AGI is less than $123,000 (married filing jointly or qualifying widow(er)), and $77,000 (single or head of household). A partial IRA deduction is allowed until your MAGI reaches $143,000 if married filing jointly, up to $87,000 if single or head of household, or up to $9,999 if married filing separately.
SIMPLE IRA: This type of plan may only be established by an employer that has 100 or fewer employees whereby each employee receives at least $5,000 in compensation in the preceding year. These are usually employer sponsored plans which may permit employee contributions. For 2023, an employee who will be at least 50 years old by the end of the tax year is able to make an additional “catch-up” contribution to a SIMPLE retirement plan in the amount of $3,500. The contribution limit to a SIMPLE IRA plan for the year 2023 is $15,500, if under age 50; $19,000 if age 50 and older.
Elective Deferral 401(k): These are generally employer sponsored plans which may permit employee contributions. For 2023, an employee who will be at least age 50 by the end of the tax year is able to take an additional “catch-up” contribution to an elective deferral 401(k) retirement plan in the amount of $7,500.
| Plan | 2023 | 2022 | 2021 |
|---|---|---|---|
| IRA Maximum Contribution Limit * | $6,500 | $6,000 | $6,000 |
| SIMPLE IRA Maximum Contribution * Limit | $15,500 | $14,000 | $13,900 |
| 401(k) Maximum Contribution Limit* (elective deferral) | $22,500 | $20,500 | $19,500 |
* Individuals who are 50 or older by the end of the year may make catch-up contributions as explained above. Other limits may apply.
Income Levels At Which Individuals Must File Tax Returns
Income Levels at Which Individuals Must File Tax Returns
The table below lists the income levels at which individuals have to file income tax returns (even though no tax is owed).
| Filing Status | 2023 | 2022 | 2021 |
|---|---|---|---|
| Single < 65 | $13,850 | $12,950 | $12,550 |
| Single 65 or older | $15,350 | $14,700 | $14,250 |
| Married, filing separately | $5.00 | $5.00 | $5.00 |
| Married, filing jointly, both spouses < 65 | $27,700 | $25,900 | $25,100 |
| Married, filing jointly, one spouse 65 or older | $29,200 | $27,300 | $26,450 |
| Married, filing jointly, both spouses 65 or older | $30,700 | $28,700 | $27,800 |
| Head of Household < 65 | $20,800 | $19,400 | $18,800 |
| Head of Household, 65 or older | $22,300 | $21,150 | $20,500 |
| Surviving Spouse < 65 with dep. child | $27,700 | $25,900 | $25,100 |
| Qualifying Widow(er) 65 or older with dep. child | $29,200 | $27,300 | $26,450 |
The income-level test is applicable to gross income and not to adjusted gross income.
Mileage Rate for Use of Your Car
Business:
Under the standard mileage method, the taxpayer determines the amount of the allowable deduction by multiplying all of the business miles driven during the year by the standard mileage rate. The standard mileage rate method may be utilized by self-employed individuals or employees who own or lease a car and operate up to four cars at a time for commercial purposes.
| Purpose | 2023 | 2022 | 2021 |
|---|---|---|---|
| Business | 1/1/2023-12/31/2023 65.5 cents/mi. |
1/1/2022-6/30/2022 58.5 cents/mi. 7/1/2022-12/31/2022 62.5 cents/mi. |
1/1/2021-12/31/2021 57.5 cents/mi. |
| Charitable 1/1/2023-12/31/2023 |
14 cents/mi. Full Year |
14 cents/mi. Full Year |
14 cents/mi. |
| Medical | 1/1/2023-12/31/2023 22 cents/mi. |
1/1/2022-6/30/2022 18 cents/mi. 7/1/2022-12/31/2022 22 cents/mi. |
1/1/2021-12/31/2021 16 cents/mi. |
| Moving | 1/1/2023-12/31/2023 22 cents/mi. |
1/1/2022-6/30/2022 18 cents/mi. 7/1/2022-12/31/2022 22 cents/mi. |
1/1/2021-12/31/2021 16 cents/mi. |
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