On October 18, 2022, the IRS released various inflation adjusted amounts for 2023. While the IRS has not yet released the pension limits for 2023 (such as the 401(k) limit), the announcement included numerous adjustments, some of which are set forth below. Please contact your Sisterson representative if you have questions about these or any other adjustments that are not listed.
Standard Deduction
The standard deduction for married couples filing jointly for 2023 rises to $27,700, up from $25,900 for 2022. For single taxpayers and married individuals filing separately, the standard deduction rises to $13,850 for 2023, up from $12,950 for 2022, and for heads of household, the standard deduction will be $20,800 for 2023, up from $19,400 for 2022.
Estate Tax Exemption Amount
The estate tax exemption amount for decedents who die during 2023 rises to $12,920,000, up from $12,060,000 for estates of decedents who died in 2022.
Annual Gift Tax Exclusion Amount
The annual exclusion for gifts made in 2023 increases to $17,000, up from $16,000 for calendar year 2022.
Section 179 for CAPEX Spending
The maximum amount for which an election to immediately deduct certain CAPEX expenditures under Section 179 increases to $1,160,000 in 2023, up from $1,080,000 in 2022. The acquisition limit is increased to $2,890,000 for 2023, up from $2,700,000 in 2022. The acquisition limit rule provides that the maximum $1,160,000 expensing amount is reduced dollar-for-dollar as total Section 179-qualifying CAPEX expenditures exceed $2,890,000.
Section 199A 20% Deduction
Section 199A provides for an automatic 20% deduction for certain trade or business income, referred to as “QBI,” or “qualifying business income.” There are limitations, such as the so-called “W-2 limitation” and the service business limitation (commonly referred to as the “SSTB” or “specified service trade or business” limitation that prohibits the deduction for certain service industries, such as attorneys, accountants, and physicians. In general, these limitations do not apply if an individual’s taxable income falls below the threshold for the year. While the rules are quite complex, the annual thresholds are indexed for inflation every year. For 2023, the thresholds will increase to $364,200 for joint filers ($340,100 for 2022), and $182,100 for all others ($170,050 in 2022). |
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