The 2023 Tax Brackets by Income
Learn how YOU will be impacted!
On October 18, 2022, the IRS announced tax inflation adjustments for the tax year 2023. Regarding married couples, the adjustments included new federal income tax brackets and a new standard deduction.
New Federal Income Tax Brackets
You can see how the changes to the tax brackets and a higher standard deduction will impact you using the calculator to your right. Before entering your financial information, change the tax filing year and status. The changes are favorable for taxpayers, easing the financial pressure on folks.
Some terms that might be gibberish to the everyday person are linked below.
- Adjustments (to income)
- Adjusted Gross Income (AGI)
Demystifying tax deductions and tax credits
Understanding the difference between above-the-line tax deductions, below-the-line tax deductions, and tax credits is important to maximize how much money you can keep in your pocket. Comprehending the definition is not enough without understanding how it applies to your tax return. Below is a short tutorial with visuals explaining how they work.
How Do Tax Brackets Actually Work?
(Answers are at the bottom of the article)
True or False: If you are in the 12% federal income tax bracket, you pay 12% of your income to the federal government.
True or False: If you and your spouse make more money and move from the 24% tax bracket to the 37% tax bracket, you will pay 13% more in federal income taxes.
True or False: Between 40%-50% of U.S. tax filers do not pay any federal income tax, but they do pay taxes in many other ways (e.g., sales tax, payroll tax, property tax)
If you had a bit of trouble with the three preceding questions, you should consider learning the basics about the U.S. federal income tax system.
Philip and Julia Olsen of Two Cents do a marvelous job illustrating basic personal finance concepts. You can find them on PBS. I highly encourage you to watch the short video below if you're not sure how our federal income tax system works. And as far as the answers to the three preceding questions (False, False, True).
BTW: Philip was kind enough to join us on the Modern Husbands Podcast. The episode will be released in early 2023. Be sure to subscribe.