2023 Tax Rates, Credits & Contribution Limits

Daniel YergerFinancial Planning 3 Comments

Hello folks! The IRS has released its indexed updates to tax rates for 2023. On average, rates have increased by approximately 7%, although there’s a lot of “rounding” in how the IRS establishes the exact brackets and rates. Details below!

Standard Deduction

The standard deduction is increasing by $900 and $1,800, respectively, between single and married filers. This means the standard deduction for single people increases from $12,950 in 2022 to $13,850 in 2023, from $25,900 to $27,700 for married filers, and to $20,800 from $19,400 for those who file as head of household.

Tax Rates and Brackets

Your tax rates in 2023 will stay the same, but the marginal tax brackets will increase to the figures below.

Tax Rate

Single Married


$0 – $11,000

$0 – $22,000


$11,000 – 44,725

$22,000 – $89,450


$44,725 – $95,375

$89,450 – $190,750


$95,375 – $182,100

$190,750 – $364,200


$182,100 – $231,250

$364,200 – $462,500


$231,250 – $578,125

$462,500 – $693,750

37% $578,125+



Maximum Earned Income Tax Credit

For those filers with three or more dependent children, the maximum Earned Income Tax Credit increases to $7,430 from $6,935. The credit is still subject to income tax rate phase-outs.

Healthcare Flex Spending Accounts (FSA)

The maximum FSA contribution has increased to $3,050. The legally permitted carry-over year-over-year for those plans that permit it is capped at $610.

The Annual Gift Limit

The Annual Gift Limit has been lifted from $16,000 to $17,000 in 2023.

The Adoption Tax Credit

The maximum tax credit for adoptions has increased from $14,890 to $15,950 for qualified adoption expenses.

401(k) and other Elective Deferrals

The limit on 401(k) contributions is increased from $20,500 to $22,500, with a permitted catch-up contribution of $7,500 for those 50 and older, for a total deferral of $30,000. The SIMPLE IRA contribution limit is increased to $15,500, with a catch-up contribution of $3,500 for those 50 and older, for a total deferral of $19,000. The Traditional and Roth IRA contribution limits are raised to $6,500 for each year, with a catch-up contribution of $1,000, for a total contribution of $7,500. Note that the catch-up provision described under 401(k) can apply to 403(b) and 457 plans. The 403(b) specifically also can permit catch-up contributions for those with at least 15 years of service, though this option is plan dependent and may not be available to everyone. The maximum deferral permitted across all defined contribution plans is $66,000, accounting for profit sharing and formula-based plans such as the SEP IRA.

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