Oith inflation soaring to about 8 percent in the United States after the coronavirus, some families struggled to cope with the rising cost of food, gas and services.
However, there may be one silver lining that stands out – the IRS has raised tax brackets, which means Americans can save Uncle Sam’s money.
Different IRS 2023 tax brackets
The standard deduction – a part of your income that the IRS simply ignores – has been increased by about 7% based on your income, marking the biggest adjustment since 1985.
For separate filers, the standard deduction jumped $900, from $12,950 this year to $13,850 in 2023.
Joint filers (e.g. a married couple) the deduction has increased from the current $25,900 to $27,700 in 2023 and heads of households will see the deduction increase from $19,400 to $20,800.
Another way Americans are saving money is by raising the thresholds for each tax bracket.
For example, if you made $42,000 in 2022, that would put you above the 22pc bracket, now you would stay entirely in the 12pc bracket instead.
However, David Caplan – a certified public accountant from Lafayette Hill – told the Philadelphia Inquirer that this may not generate savings as large as expected.
“Even if you’re in a different tax bracket, that doesn’t mean you pay that amount on all of your income,” Caplan said. “You will pay the average of all brackets you are in.”
Although the IRS makes adjustments every year, these are unprecedented in this generation and this is what leads to the potential for higher savings.