Key Federal Tax Figures for 2023
Several points of interest emerge from a review of the 2023 figures.
Increase in Standard Deduction
The tax reform legislation enacted in December 2017 nearly doubled the standard deduction. For 2023, the new higher amounts have increased again by an inflation adjustment. For a married couple filing a joint return, the increase is $1,800, to $27,700. Similar increases occurred for heads of households, single individuals, and married couples filing separate returns.
Automobile Mileage Rates
The tax-free mileage rate for business use of a vehicle increased to 65.5 cents per mile from 62.5 cents per mile, an increase of 3 cents per mile from the June 2022 mid-year adjusted amount, and an increase of 9.5 cents per mile from 2021.
The tax-deductible mileage rate for medical mileage remained unchanged at 22.0 cents per mile and the mileage rate for charitable mileage also remained unchanged at 14.0 cents per mile. Note that with the suspension of the moving expense deduction, there is no mileage reimbursement rate for moving mileage.
Other Inflation Adjustments for 2023
Inflation adjustments affect many areas, but not everything. Examine the specific issues that affect your organization carefully. Some examples:
|In 2022 and Returns for 2022||In 2023 and Returns for 2023|
|Foreign earned income exclusion||$112,000||$120,000|
|OASDI maximum wage base||$147,000||$160,200|
|Maximum annual contribution to defined|
|Maximum salary deduction for 401(k)/403(b)||$20,500||$22,500|
|401(k)/403(b) over 50 “catch-up” limit||$6,500||$7,500|
|IRA contribution limit||$6,000||$6,500|
|Maximum value of de minimis benefit||2% of gift, but max. $117.00||2% of gift, but max. $125.00|
|Highly compensated employee limit||$135,000||$150,000|
|Annual gift tax exclusion amount||$16,000||$17,000|
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