2023 Standard Deduction Amounts Are Now Available - Here's What You Need to Know

 2023 Standard Deduction Amounts Are Now Available - Here's What You Need to Know

 2023 Standard Deduction Amounts

In the U.S., every taxpayers receives what’s called the standard deduction, and it can help reduce your taxable income when filing your taxes each year. On January 15th of this year, the IRS revealed the standard deduction amounts that taxpayers can use on their tax returns in 2019, but you may be asking yourself what they will be once they go into effect next year on January 1st, 2023? The answer to that question is now readily available thanks to the IRS's official release of the standard deduction amounts that all taxpayers will be able to use come January 1st, 2023.

The standard deduction is rising for inflation

Next year, the standard deduction will increase from $12,000 to $12,200 for singles and married couples filing separately. The standard deduction for heads of household will be $18,350 and for joint filers it will be $24,400. This is due to inflation that was recorded in 2017. There have also been a number of tax changes with the new tax reform bill passed in December 2018. 

One change that impacts many taxpayers is the elimination of personal exemptions. Previously, you could reduce your taxable income by $4,050 for each person on your return: yourself, your spouse if you file jointly, and any dependents claimed on your return.

The new standard deduction amounts are:

- Single: $12,200 (up from $12,000)

- Married filing jointly: $24,400 (up from $24,000) - Head of household: 

$18,300 (up from $18,000) 

- Married filing separately: $6,650

These new deduction amounts will be in effect for tax years 2021 and 2022

If you're wondering what these new deduction amounts will be in effect for tax years 2021 and 2022, here's what you need to know: 

- The standard deduction is $13,000 for singles (up from $12,700) and $26,400 for married filing jointly (up from $24,200). 

- The basic standard deduction is the same as the 2019 amount ($12,000) but a higher amount is available if you're over 65 or blind.

The standard deduction is still the best option for most taxpayers

The Internal Revenue Service announced that the standard deduction for tax year 2023 is $27,000. This amount will be adjusted upward if Congress approves a bill increasing the amount. 

The 2019 inflation-adjusted standard deduction is $12,200 for single taxpayers and married taxpayers filing separately; $18,350 for heads of household; and $24,400 for married taxpayers filing jointly or a qualifying widow(er). The basic standard deduction amounts are not adjusted for inflation.

If you have questions about the standard deduction, please contact a tax professional

The standard deduction is one of the simplest and most used tax breaks available. It reduces your taxable income, which could be a big benefit if you're in a high-tax bracket. The 2018 standard deduction amount is $12,000 for single filers and married taxpayers filing separately; $24,000 for head of household filers; and $18,000 for married taxpayers filing jointly. The Tax Cuts and Jobs Act, passed by Congress on December 22, 2017, changes some of these amounts: The new law increased the basic standard deduction from $6,500 to $12,000 for singles and from $13,600 to $24,000 for heads of households.