2023 Tax Year Changes | Blog | Meg K. Wheeler LLC

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2023 Tax Year Changes: Inflation-adjusted numbers and new limits on savings contributions

Taxes

For many, tax year 2023 may not be as painful when it comes to taxes…

The IRS announced this week updated inflation-adjusted numbers, resulting in potentially some big changes for a lot of individuals:

✅ Standard deductions rose from $25,900 to $27,700 for married taxpayers and from 

$12,950 to $13,850 for singles and couples filing separately

✅ All of the individual tax brackets will increase by 7%, meaning that many of us will find ourselves in a lower top tax bracket than in 2022

✅ The max contribution to your 401(k) increases from $20,500 to $22,500 – a huge win if you’re already saving for retirement and can spare the extra $2k in pre-tax contributions!

More details on the IRS limits for savings plans for tax year 2023

The IRS is substantially raising the limits on what individuals can contribute to their 401(k) plans and IRAs. You can read more about them in Notice 2022-55, posted today on IRS.gov.

For tax year 2023, here’s what you need to know:

  • Employees can contribute $22,500 to 401(k), 403(b), most 457 plans and the federal government’s Thrift Savings Plan
  • Annual contribution to IRA increased to $6,500
  • Catch-up contribution limit for employees aged 50 and over who participate in 401(k), 403(b), most 457 plans and the federal government’s Thrift Savings Plan is increased to $7,500
    • This means that participants in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan who are 50 and older can contribute up to $30,000, starting in 2023. 
    • The catch-up contribution limit for employees aged 50 and over who participate in SIMPLE plans is increased to $3,500, up from $3,000.

**Please note that these changes are for tax year 2023, i.e. taxes that will be filed in 2024. 

Make sure to talk with your tax advisor about how this will impact your overall situation and whether you need to make any changes before the start of the new year.


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