IRS INFLATION ADJUSTMENT: STANDARD DEDUCTIONS BEING RAISED

The Internal Revenue Service has announced that it’s increasing its inflation adjustments for the 2023 tax year. It’s a move to help American taxpayers who’ve been struggling with prices for rent, groceries, and gas that have reached heights not seen in 4 decades.

The announcement of adjustments is an annual occurrence, but in a year of high inflation, the move to raise the standard deduction and income thresholds where tax rates take effect may mean savings for people in all income brackets.

For single taxpayers and for married individuals filing separately, the standard deduction is increasing to $13,850 for 2023, that’s up $900 from 2022. The standard deduction for married couples filing jointly is going up by $1,800 from last year to $27,700. And for heads of households, the standard deduction will be $20,800 for the tax year 2023, an increase of $1,400 from the 2022 tax year.

Data released by the Bureau of Labor Statistics last week showed that compared to last year, rent is up 7.2%, electricity prices are up 15.5%, groceries are up 13%, and health insurance is about 30% more expensive.