2023 Tax Brackets adjustments will affect how much you pay in taxes and what deductions and credits you can take. With prices rising at record rates, inflation is one of the biggest concerns among American taxpayers. Learn more about the tax brackets for 2023, how they’re adjusted for inflation, and when the new tax rates will be effective.
Annual Inflation Adjustment
Inflation is rising, and the government is making inflation adjustments to the federal tax brackets. As a result, the inflation adjustment factor for 2023 will be higher than for 2022.
Inflation adjustments will affect the boundaries of all federal income tax brackets. The inflation adjustment factor is calculated by taking the average monthly CPI change during the federal fiscal year, which began in October last year and ends in September 2022.
The annual inflation adjustment for the 2023 tax year will be 7.3%, which is higher than the inflation rate for the current year of 2022.
Inflation indexing is based on an average of 12 monthly readings of the chain-weighted consumer price index. Because wages have not kept up with inflation in recent years, inflation indexing is expected to decrease tax withholdings in most households.
In addition, the standard deduction for both single and joint filers will increase by $900 and $1,800, respectively. The lower 10% federal income tax rate will apply to the first $11,000 taxable income for single filers and $22,000 for joint filers.
When Do New tax rates take effect?
The new tax brackets will apply to all income earned on or after January 1, 2023. However, the new rates will not be retroactive, so the old tax brackets will continue to apply to any tax event in 2022. You can plan and implement intelligent tax strategies as long as you know what the tax brackets will be.
2023 Federal Tax Brackets
- The following table shows the federal tax rates for the years 2022 & 2023 for single filers.
| Tax bracket | 2022 | 2023 | Difference |
| 10% | 0 | 0 | 0 |
| 12% | $10,276 | $11,000 | $725 |
| 22% | $41,776 | $44,726 | $2,950 |
| 24% | $89,076 | $95,376 | $6,300 |
| 32% | $170,051 | $182,101 | $12,050 |
| 35% | $215,951 | $231,251 | $15,300 |
| 37% | $539,901 | $578,126 | $38,225 |
- The following table shows the federal tax rates for the years 2022 & 2023 for joint filers
| Tax bracket | 2022 | 2023 | Difference |
| 10% | $0 | $0 | $0 |
| 12% | $20,551 | $22,001 | $1,450 |
| 22% | $83,551 | $89,451 | $5,900 |
| 24% | $178,151 | $190,751 | $12,600 |
| 32% | $340,101 | $364,201 | $24,100 |
| 35% | $431,901 | $462,501 | $30,600 |
| 37% | $647,851 | $693,751 | $45,900 |
