Important: This article applies only to Tax Year 2023 returns. If you are filing a return for a different tax year, the tax laws, credit amounts, deduction limits, and income thresholds may be different.
If you're filing a 2023 tax return, the following tax law changes and inflation adjustments may affect your return.
Tax Brackets and Threshold increases:
Income Tax Brackets
For more information, refer to our tax bracket article.
Long-Term Capital Gains Tax Threshold
Long-term capital gains tax rates remained 0%, 15%, and 20%, but the income thresholds increased for 2023.
-
0% Rate
- Single: Up to $44,625
- Head of Household: Up to $59,750
- Married Filing Jointly: Up to $89,250
-
20% Rate Begins At
- Single: $492,301
- Head of Household: $523,051
- Married Filing Jointly: $553,851
- The 15% rate applies to taxable income between the 0% and 20% thresholds.
Standard Deduction
Standard deduction amounts increased for 2023.
2023 Standard Deduction Amounts
- Single or Married Filing Separately (MFS): $13,850
- Married Filing Jointly (MFJ) or Qualifying Surviving Spouse: $27,700
- Head of Household (HOH): $20,800
Additional Standard Deduction for Age 65 or Older or Blind
A taxpayer is considered to reach age 65 on the day before their 65th birthday.
If you or your spouse were legally blind and/or born before January 2, 1959, the following amounts are added to the standard deduction for each qualifying occurrence:
- Married Filing Jointly, Qualifying Surviving Spouse, or Married Filing Separately: $1,500 per qualifying individual
- Single or Head of Household: $1,850
Social Security Wage Base
For 2023, the Social Security wage base increased to $160,200.
Once wages exceed this amount, no additional Social Security tax is withheld for the remainder of the year.
Credits
Residential Clean Energy Credit
You may be eligible for a credit equal to 30% of the costs of qualified:
- Solar electric property
- Solar water heating property
- Small wind energy property
- Geothermal heat pump property
- Biomass fuel property
Eligible costs may include labor expenses associated with the onsite preparation, assembly, and installation of qualifying property, as well as related wiring and piping.
Energy Efficient Home Improvement Credit
You may be eligible for a credit based on:
- Qualified energy efficiency improvements installed during 2023, and
- Qualified residential energy property costs paid or incurred during 2023.
Refer to our Clean Energy Credits article for additional information.
Clean Vehicle Credit
You may qualify for a credit of up to $7,500 if you purchased a qualifying new plug-in electric vehicle (EV) or fuel cell vehicle (FCV) for personal use and primarily operate it in the United States.
Modified AGI limits:
- Married Filing Jointly: $300,000
- Head of Household: $225,000
- All Other Filers: $150,000
For complete qualification requirements, click here.
Adoption Credit
For Tax Year 2023:
- Maximum credit: $15,950 per eligible child
- Full credit available for a qualifying special-needs adoption, even when adoption expenses are lower
- Phaseout range begins at $239,230 of modified AGI and ends at $279,230
Reporting changes
Form 1099-K
The IRS announced transition relief for third-party settlement organizations regarding Form 1099-K reporting.
If you receive a Form 1099-K, review the amounts carefully and report all taxable income as required on your return.
For complete reporting instructions, refer to our 1099-K Reporting article.
Required Minimum Distributions (RMDs)
Beginning in 2023, the SECURE 2.0 Act increased the age at which many taxpayers must begin taking Required Minimum Distributions (RMDs) from retirement accounts from age 72 to age 73.
For additional information, see our Tax Year 2023 RMD Information article.
Taxes
Kiddie Tax
For 2023:
- First $1,250 of a child's unearned income is generally tax-free.
- Next $1,250 is taxed at the child's tax rate.
- Unearned income over $2,500 is generally taxed at the parent's rate.
These rules generally apply to children age 18 and under, or certain full-time students under age 24.
Alternative Minimum Tax (AMT)
2023 AMT Exemptions
- Married Filing Jointly: $126,500
- Phaseout begins at $1,156,300
- Single or Head of Household: $81,300
- Phaseout begins at $578,150
Deductions and Adjustments
Parking and Transportation Benefits
The monthly exclusion for employer-provided qualified parking increased to $300 per month for 2023.
Student Loan Interest Deduction
The maximum deduction remains $2,500.
Phaseout Ranges
Married Filing Jointly
- Begins at modified AGI over $155,000
- Eliminated at modified AGI over $185,000
All Other Filers
- Begins at modified AGI over $75,000
- Eliminated at modified AGI over $90,000
Standard Mileage Rates
For 2023:
- Business mileage: 65.5 cents per mile
- Medical mileage: 22 cents per mile
- Military moving mileage: 22 cents per mile
Long-Term Care Insurance Premium Limits
Maximum deductible premiums for 2023:
- Age 71 or older: $5,960
- Age 61 to 70: $4,770
- Age 51 to 60: $1,790
- Age 41 to 50: $890
- Age 40 or younger: $480
Health Savings Accounts (HSAs)
2023 Contribution Limits
- Self-only coverage: $3,850
- Family coverage: $7,750
2023 Maximum Out-of-Pocket Limits
- Self-only coverage: $7,500
- Family coverage: $15,000
Flexible Spending Accounts (FSAs)
For Tax Year 2023, employee salary reduction contributions to a healthcare FSA are limited to $3,050.
Business Tax Changes
Qualified Business Income Deduction (QBID)
Taxpayers who qualify for the Qualified Business Income Deduction may generally deduct up to 20% of qualified business income.
For 2023, the taxable income thresholds increased to:
- Married Filing Jointly: $364,200
- All Other Filers: $182,100
Bonus Depreciation
The first-year bonus depreciation percentage for qualifying business property decreased from 100% to 80% for property placed in service during 2023.
Business Meal Deduction
The temporary 100% deduction for business meals expired. Most business meals returned to the standard 50% deduction limitation.
Exclusions
Education Savings Bond Interest Exclusion
You may be able to exclude interest from qualifying Series EE and I Savings Bonds used for qualified education expenses.
MAGI Phaseout Ranges
Married Filing Jointly
- Begins at $137,800
- Ends at $167,800
All Other Filers
- Begins at $91,850
- Ends at $106,850
Foreign Earned Income Exclusion
For 2023:
- Foreign Earned Income Exclusion: $120,000
- Foreign Housing Exclusion Base Amount: $16,800