The IRS Adjusts for Inflation: Higher Income Tax Brackets and Saving Limits for IRAs and 401(k)s
To adjust for inflation, the IRS announced higher federal income tax brackets and standard deductions as well as a boost in saving limits for 401(k)s and individual retirement accounts. These changes apply to tax year 2023 for returns filed in 2024.
For anyone saving for retirement with a traditional or Roth IRA, the 2023 limit on annual contributions to their account went up $500 – from $6,000 this year to $6,500 next year. That's an increase of 8.33%.
For 401(k) accounts, savers will be able to sock away $22,500 a year in 2023; those 50 and above can contribute an additional $7,500, for a total annual contribution of $30,000.
Adjusted Tax Brackets for 2023:
Other tax figures that got a boost:
- Alternative minimum tax, a parallel system for higher earners
- Estate tax exemption for wealthy families
- Write-off for low-to moderate-income filers bumped to $7,430
- Employees can now put $3,050 into health flexible spending accounts
Get more specifics at the following link:
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