It's that time of year again – tax season is upon us! As a taxpayer, it's important to stay informed about the latest tax updates and changes so that you can ensure you're compliant and taking advantage of all available deductions and credits.
Here are some of the most significant tax updates for 2023 that you should be aware of:
Increased Standard Deduction: The standard deduction has increased for the 2023 tax year. For individuals, the standard deduction is now $12,400 (up from $12,000 in 2022). For married couples filing jointly, the standard deduction has increased to $24,800 (up from $24,000 in 2022).
Changes to Itemized Deductions: Some itemized deductions have changed for 2023. For example, the limit on the state and local tax (SALT) deduction has been reduced to $10,000. Additionally, the limit on the mortgage interest deduction has been reduced to loans of $750,000 or less (down from $1,000,000 in 2022).
Increased Child Tax Credit: The child tax credit has been increased for 2023. The credit is now worth $3,000 per child under the age of 17 (up from $2,000 in 2022). Additionally, the age limit for the child tax credit has been increased to 17 years old (up from 16 years old in 2022).
Changes to Retirement Contributions: The contribution limit for 401(k) and similar retirement plans has increased for 2023. The contribution limit is now $19,000 (up from $18,000 in 2022). For individuals over the age of 50, the catch-up contribution limit has increased to $6,000 (up from $5,000 in 2022).
Increased Estate Tax Exemption: The estate tax exemption has increased for 2023. The exemption is now $11.7 million (up from $11.58 million in 2022).
By staying informed about the latest tax updates, you can ensure that you're taking advantage of all available deductions and credits and that you're staying compliant with the tax laws. If you have any questions about how these updates might impact your tax situation, be sure to consult with a tax professional.
At Five Star CPA, we stay up-to-date on all of the latest tax updates and changes so that we can provide our clients with the best possible advice and guidance. If you need assistance with your taxes this year, don't hesitate to get in touch with us. We're here to help!"