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The IRS Adjusts for Inflation: Higher Income Tax Brackets and Saving Limits for IRAs and 401(k)s Thumbnail

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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“Fox Financial Group, nor any of its members, are tax accountants, and do not provide tax advice. For tax advice, you should consult your tax professional. Investment advisory services offered through Mutual Advisors LLC DBA Fox Financial Group, an SEC registered investment adviser. Investment advisory services are offered through Mutual Advisors, LLC DBA Fox Financial Group, a SEC registered investment adviser.”