New for 2023: Contribution limits, tax brackets, key benefit changes & more

Every year, federal agencies like the Internal Revenue Service and Social Security Administration assess the impact of inflation and the current environment on their areas of oversight. Sometimes, this results in federal benefit program changes, tweaks to tax rules and adjustments to tax-advantaged plans that are regulated by law.

To help you plan for the new year, here is a roundup of key 2023 changes that could affect how you save, spend and invest. As you review these new numbers, know that we’re on top of these annual changes, and others, and are available to discuss how we can adjust your financial plan accordingly.

And please note: This article is intended to be a summary of changes for 2023 and does not detail all modifications implemented by the federal government this year, nor any changes from the recently passed SECURE Act 2.0. Please reach out to me if you have any specific questions.

In this article
  1. Key tax changes
  2. Retirement contribution limits
  3. Income phase-out ranges for IRAs
  4. Health care and dependent care savings accounts
  5. Social Security
  6. Medicare

 

Key tax changes

Inflation has prompted the IRS to raise income thresholds for all tax brackets and increase the standard deduction.

Income tax brackets — for taxable income in 2023

Income thresholds for tax brackets will increase by approximately 7% for 2023. Taxable income is calculated by subtracting your deductions from your adjusted gross income.

Tax bracket Single Married filing jointly Head of household Married filing separately
10% $0 –

$11,000

$0 –

$22,000

$0 –

$15,700

$0 –

$11,000

12% $11,001 –

$44,725

$22,001 –

$89,450

$15,701 –

$59,850

$11,001 –

$44,725

22% $44,726 –

$95,375

$89,451 –

$190,750

$59,851 –

$95,350

$44,726 –

$95,375

24% $95,376 –

$182,100

$190,751 –

$364,200

$95,351 –

$182,100

$95,376 –

$182,100

32% $182,101 –

$231,250

$364,201 –

$462,500

$182,101 –

$231,250

$182,101 –

$231,250

35% $231,251 –

$578,125

$462,501 –

$693,750

$231,251 –

$578,100

$231,251 –

$346,875

37% $578,126+ $693,751+ $578,101+ $346,876+

Please note: The tax brackets above are for the 2023 tax year. They are not used to calculate 2022 taxes.

 

General standard deduction  

Filing status 2022 2023
Single $12,950 $13,850
Married filing jointly $25,900 $27,700
Head of household $19,400 $20,800
Married filing separately $12,950 $13,850

 

Additional standard deduction for those 65+ or blind

Filing status 2022 2023
Single / head of household $1,750 $1,850
Married (joint, separate) or surviving household $1,400 $1,500

 

Dependent standard deduction

  2022 2023
Dependent with investment income only $1,150 $1,250
Dependent with earned income $1,150 – $12,950 $1,250 – $13,850

 

Estate tax exclusion amounts

2022 2023
$12.1 million $12.9 million

 

Gift tax – annual exclusion

2022 2023
$16,000 $17,000

 

Retirement contribution limits     

                                                                  

401(k), 403(b), 457 plan, Thrift Savings Plan

  2022 2023
Elective deferral limit $20,500 $22,500
Additional catch-up amount for employees 50+ $6,500 $7,500

 

SIMPLE retirement plans

  2022 2023
Elective deferral limit $14,000 $15,500
Additional catch-up amount for individuals 50+ $3,000 $3,500

 

IRAs (traditional IRAs and Roth IRAs)

 

For 2023, the total contributions you can make to any IRA (traditional or Roth) can’t be more than the following limits:

  2022 2023
Individuals $6,000 $6,500
Additional catch-up amount for individuals 50+* $1,000 $1,000

*Note: IRA catch-up limit is not subject to an annual cost-of-living adjustment.

Income phase-out ranges for Roth and Traditional IRAs

The following are the modified adjusted gross income (MAGI) phase-out ranges for Roth IRAs and traditional IRAs.

MAGI phase-out range — for making contributions to Roth IRAs

  2022 2023
Single/head of household  $129,000 –

$144,000

$138,000 –

$153,000

Married couple filing jointly $204,000 –

$214,00

$218,000 –

$228,00

Married individual filing a separate return who makes contributions to a Roth IRA No change. The phase-out range is not subject to an annual cost-of-living adjustment and remains between $0 and $10,000.

 

MAGI phase-out range — for making deductible contributions to Traditional IRAs

  2022 2023
Single/head of household $68,000 –

$78,000

$73,000 –

$83,000

Married couple filing jointly $109,000 –

$129,000

$116,00 –

$136,000

Individual not covered by a workplace retirement plan but is married to someone who is covered $204,000 –

$214,000

$218,000 –

$228,000

Married individual filing a separate return who is covered by a workplace retirement plan No change. Phase-out range is not subject to an annual cost-of-living adjustment and remains between $0 and $10,000.

 

Health care and dependent care account contribution limits

Health Savings Accounts (HSA)

  2022 2023
Individual $3,650 $3,850
Family $7,300 $7,750
Catch up (for those 55+)* $1,000 $1,000

*Note: Catch-up amounts are not indexed to inflation.

Health care Flexible Spending Accounts (FSA)

  2022 2023
Maximum $2,850 $3,050
Carryover maximum $570 $610


Social Security

The coming year brings a large cost of living adjustment (COLA) for Social Security. Benefits will jump 8.7%[i] for approximately 70 million Americans in 2023. According to the Social Security Administration, benefits will increase by an average more than $140 per month starting in January, affecting approximately 70 million Americans.1

 

  2022 2023
COLA benefit increase 5.9% increase2 8.7% increase
Maximum earnings subject to Social Security tax $147,000 $160,200

 

Earnings limitations for retirees

Some retirees who have begun to collect Social Security retirement benefits choose to continue working.  Individuals who are younger than full retirement age, collecting Social security retirement benefits, and continuing to work, will have some or all their Social Security benefits reduced if they earn more than certain dollar amounts.

  2022 2023
Earnings limit for workers who are younger than full retirement age (benefits reduced $1 for each $2 over the earnings limit) $19,560 $21,240
Earnings limit for people in the year they reach their full retirement age in 2023, but before the month of full retirement age (benefits reduced $1 for each $3 over the earnings limit) $51,960 $56,520

 

Medicare

Medicare Part B premium and deductible amounts

  2022 2023
Standard monthly premium $170.10 $164.90
Annual deductible for all beneficiaries $233 $226

 

Medicare Part A deductible and coinsurance amounts

  2022 2023
Inpatient hospital deductible $1,566 $1,600
Daily coinsurance for days 61-90 $389 $400
Daily coinsurance for lifetime reserve days $778 $800

 

To learn more, contact: Peter Weinbaum
Peter Weinbaum, Financial Advisor serving the Duluth, GA area - Ameriprise Advisors

CFP®, MBA, CDFA® 
Financial Advisor
Associate Vice President
 

Contact Peter Weinbaum-Ameriprise Financial Services, Inc.

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