Ready to Get Started?
Please give us a call or fill out our contact form and a member of our friendly team will be in touch.
We’re ready to help you today!
It’s that time of year when the Internal Revenue Service (IRS) announces changes to its rules for the next tax year ahead. While you’re likely still trying to get this tax year closed out, the latest batch of updates from the IRS is worth paying attention to.
Here are the most important tax updates you need to know for 2023:
In mid-October, the IRS announced it would be increasing the tax bracket thresholds by about 7% for the 2023 tax year. While annual alterations are typical, this level of increase hasn’t been seen since 1985. According to the IRS, the jump is necessary to keep pace with inflation.
What does this change mean? First, many individuals who were situated on the edge of their tax bracket in 2022 will now find themselves in a lower bracket. As a result, they’ll see higher take-home pay.
This also means that more employees will need to make changes to paycheck withholding amounts, retirement contributions, and health savings plans.
Employers and HR personnel should be prepared for the influx of paycheck alterations by making themselves available for guidance. They may also want to host an in-depth presentation on the implications of the tax changes before year-end.
As part of the IRS’s inflation adjustment, all 2023 filers claiming the standard deduction will see less of their income subject to federal income tax.
The IRS has announced the following increases from 2022’s standard deductions:
The change in standard deduction amounts further decreases a filer’s taxable income. Along with increased tax thresholds, this is another opportunity for taxpayers to drop into a lower bracket.
With all the anticipated changes to employee paychecks, make sure you have a great payroll provider who can keep up. Here at Future Systems, we can ensure your year-end is less hectic. Request a quote!