![]() ![]() itemized deductions: USA Today also advises calculating how taking the standard deduction as opposed to itemized deductions shifts things, "since it could put you in a lower bracket, depending on your financial situation.There's an additional 3.8% surtax on net investment income (NII) that you might have to pay on top of the capital gains tax. Contributing to an IRA could also allow you to secure a tax deduction, which could help with lowering your tax bracket. Or depending on your income and circumstances, you may lower your tax bracket by filing an individual return."Ĭontributing to a 401(k) or IRA: You may also lower your tax bracket by contributing to a 401(k) plan, as your contributions will lower your taxable income. This includes:įiling under a different status: According to USA Today, how you file could affect which tax bracket you qualify for: "If you're married, filing a joint return with your spouse could qualify you for a lower tax bracket. It certainly is possible to lower your tax bracket, and there are a number of ways you can go about doing it. This widening of the brackets is actually good news - it means there's a lower chance that those whose income either remains the same or doesn't keep pace with inflation will end up in a higher tax bracket next year. ![]() For the upcoming tax year, "the width of the 22 percent singles bracket grew by more than twice as much," Kiplinger notes, explaining that the "2023 bracket covers $50,649 of taxable income ($95,375 – $44,726 = $50,649), which is $3,350 wider than for 2022." The changes impact the width of individual tax brackets, which means the difference between the lowest and highest dollar amounts within a tax bracket. Kiplinger reports that because "inflation has been high over the past year or so, the inflation adjustments impacted tax brackets more this year than what most of us are used to." There are some major shifts ahead for tax year 2023. Filing statuses include single filers, married couples filing jointly, married couples filing separately, and head of household filers, each of which has their own distinct tax brackets. Put simply, a tax bracket "is the range of incomes taxed at given rates, which typically differ depending on filing status," explains the Tax Foundation. First, a quick refresher on how income tax brackets workīefore we dive straight into the numbers, let's make sure we're all on the same page as far as how income tax brackets work. If your filing status has changed since last tax year, that could also have an impact. This could shift how things look for your taxes this year - specifically, how much you pay on some of your income. However, there are changes to the tax brackets. As USA Today explains, "f the IRS didn't adjust the federal income tax brackets for inflation you'd likely end up in a higher tax bracket since salaries are often adjusted for inflation."įor tax year 2022, tax rates themselves aren't actually changing. While this might sound unfair, it could actually be helpful for your bottom line. Each year, the IRS announces new tax brackets, which are updated to account for inflation. Spring is just around the corner, and so is tax season.
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