The IRS has announced new tax rates, credits and exclusions that will take effect in 2023. The changes may be good news for some taxpayers. The IRS adjusts tax brackets and rates based on inflation. Since inflation has risen sharply recently, taxpayers may find themselves taxed at lower rates.

Reproduced below are the 2023 gift and estate tax figures as published by the IRS. These are followed by information on the new income tax brackets and rates applicable to income earned in 2023. Note: this information applies to the 2023 tax year, not to 2022 tax filings.

 Combined Gift and Estate Tax Exemption

The estate tax credit and annual gift tax exclusion amount are going up.

.41 Unified Credit Against Estate Tax. For an estate of any decedent dying in calendar year 2023, the basic exclusion amount is $12,920,000 for determining the amount of the unified credit against estate tax under § 2010

 Gift Tax Annual Exclusion

.43 Annual Exclusion for Gifts. (1) For calendar year 2023, the first $17,000 of gifts to any person (other than gifts of future interests in property) are not included in the total amount of taxable gifts under § 2503 made during that year.

Income Tax Rates

2023 income tax rates for taxpayers who are married filing jointly are reproduced below. Information on brackets and rates for other taxpayers available here.

.01 Tax Rate Tables. For taxable years beginning in 2023, the tax rate tables under § 1 are as follows:

TABLE 1 – Section 1(j)(2)(A) – Married Individuals Filing Joint Returns and Surviving Spouses

If Taxable Income Is:             The Tax Is:

Not over $22,000                   10% of the taxable income

Over $22,000 but                   $2,200 plus 12% of

not over $89,450                   the excess over $22,000

Over $89,450 but                   $10,294 plus 22% of

not over $190,750                  the excess over $89,450

Over $190,750 but                 $32,580 plus 24% of

not over $364,200                  the excess over $190,750

Over $364,200 but                 $74,208 plus 32% of

not over $462,500                  the excess over $364,200

Over $462,500 but                 $105,664 plus 35% of

not over $693,750                  the excess over $462,500

Over $693,750                       $186,601.50 plus 37% of

the excess over $693,750

TABLE 3 – Section 1(j)(2)(C) – Unmarried Individuals (other than Surviving Spouses and Heads of Households)

If Taxable Income Is:             The Tax Is:

Not over $11,000                   10% of the taxable income

Over $11,000 but                   $1,100 plus 12% of

not over $44,725                   the excess over $11,000

Over $44,725 but                   $5,147 plus 22% of

not over $95,375                   the excess over $44,725

 

Over $95,375 but                   $16,290 plus 24% of

not over $182,100                  the excess over $95,375

Over $182,100 but                 $37,104 plus 32% of

not over $231,250                  the excess over $182,100

Over $231,250 but                 $52,832 plus 35%

of not over $578,125             the excess over $231,250

Over $578,125                       $174,238.25 plus 37% of the excess                over $578,125

Standard Deduction for 2023

For Single Filers = $13,850 (can increase by $1,850 if over age 65)

For Couples Filing Jointly = $27,700 (can increase by $1,500 each if over age 65)

The above rates and other 2023 tax numbers are available here.

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