The IRS has issued Revenue Procedure 2022-38, which sets forth inflation-adjusted items for various provisions of the Internal Revenue Code which will be applicable in 2023. Here are some of the highlights:
Income Tax Adjustments. Below is the tax table applicable to married individuals filing joint returns (and “Surviving Spouses”), for tax years beginning after December 31, 2022:
| If Taxable Income Is | The Tax Is |
| Not over $22,000 | 10% of the taxable income |
| Over $22,000 but not over $89,450 | $2,200 plus 12% of the excess over $22,000 |
| Over $89,450 but not over $190,750 | $10,294 plus 22% of the excess over $89,450 |
| Over $190,750 but not over $364,200 | $32,580 plus 24% of the excess over $190,750 |
| Over $364,200 but not over $462,500 | $74,208 plus 32% of the excess over $364,200 |
| Over $462,500 but not over $639,750 | $105,664 plus 35% of the excess over $462,500 |
| Over $693,750 | $186,601 plus 37% of the excess over $693,750 |
By comparison, here is the rate table applicable for 2022:
| If Taxable Income Is | The Tax Is |
| Not over $20,550 | 10% of the taxable income |
| Over $20,550 but not over $83,550 | $2,055 plus 12% of the excess over $20,550 |
| Over $83,550 but not over $178,150 | $9,615 plus 22% of the excess over $83,550 |
| Over $178,150 but not over $340,100 | $30,427 plus 24% of the excess over $178,150 |
| Over $340,100 but not over $431,900 | $69,295 plus 32% of the excess over $340,100 |
| Over $431,900 but not over $647,850 | $98,671 plus 35% of the excess over $431,900 |
| Over $647,850 | $174,253.50 plus 37% of the excess over $647,850 |
Many people do not realize it, but when it comes to the tax rates applicable to net long-term capital gains (technically defined as “net capital gain”), a certain amount of long term capital gain (“LTCG”) may be eligible for a zero tax rate. Likewise, there is a maximum amount of LTCG that would be subject to what most people consider the “normal” LTCG rate of 15%. The zero rate amount for 2023 has increased to $89,250, while the 15% rate is capped at $553,850.
The standard deduction, in the case of married individuals filing joint returns, will move from $25,900 in 2022 to $27,700 in 2023 (the standard deduction for unmarried individuals (other than surviving spouses and heads of household) will be half that amount in 2023 -- $13,850). For tax years beginning in 2023, the additional standard deduction amount for those over age 65 or blind is $1,500, compared to $1,400 in 2022.
For taxable years beginning in 2023, a “high deductible health plan” means, for family coverage, a health plan with an annual deductible that is at least $5,300 and does not exceed $7,900, and under which annual out-of-pocket expenses (other than for premiums) for covered benefits do not exceed $9,650.
Estate and Gift Taxes. What is commonly referred to as the “estate tax exemption amount” increases to $12,920,000 in 2023 (up from $12,060,000 in 2022). The limitation on “annual exclusion gifts” increases to $17,000 (up from $16,000 in 2022).
There are lots of other Code sections with various thresholds, caps and other limitations that are adjusted in Revenue Procedure 2022-38.
For a review of the complete document click this link:
Part III Administrative, Procedural, and Miscellaneous, 26 CFR 601.602 (irs.gov)
PartnerBruce Rawls practices in the firm's Business section, concentrating on tax and business planning.
In addition to membership in the Alabama State Bar, he is a member of the State and Local Taxes Committee of the American Bar ...
