What’s new for Individual taxes for 2023
Taxes are an important part of life, and every year, new changes are made to the tax code. In 2023, there are a few new changes that taxpayers should be aware of.
The first change is the increase in the standard deduction.
The standard deduction is the amount of income that is not subject to taxation. For the 2021 tax year, the standard deduction is $12,550 for individuals and $25,100 for married couples filing jointly. For the 2023 tax year, the standard deduction will increase to $13,000 for individuals and $26,000 for married couples filing jointly. This increase will help reduce the amount of taxable income for many taxpayers.
The second change is the introduction of the Child Tax Credit.
The Child Tax Credit is a credit that can be claimed for each qualifying child under the age of 17. For the 2021 tax year, the credit is worth up to $2,000 per qualifying child. For the 2023 tax year, the credit will increase to $3,000 per qualifying child. This increase will help reduce the amount of taxes owed for many families with children.
The third change is the introduction of the Earned Income Tax Credit.
The Earned Income Tax Credit is a credit that can be claimed by taxpayers with low to moderate incomes. For the 2021 tax year, the credit is worth up to $6,660 for individuals and $13,330 for married couples filing jointly. For the 2023 tax year, the credit will increase to $7,000 for individuals and $14,000 for married couples filing jointly. This increase will help reduce the amount of taxes owed for many low-income taxpayers.
The fourth change is the increase in the Alternative Minimum Tax (AMT) exemption.
The 2023 Alternative Minimum Tax (AMT) exemption is a tax provision that allows taxpayers to reduce their taxable income and avoid paying the AMT. The exemption amount for 2023 is $73,600 for single filers and $114,600 for married couples filing jointly. The exemption amount is adjusted annually for inflation. Taxpayers with income above the exemption amount may be subject to the AMT, which is a separate tax system with its own set of rules and rates. The AMT is designed to ensure that taxpayers with higher incomes pay at least a minimum amount of taxes. Taxpayers with income below the exemption amount are not subject to the AMT. The AMT exemption amount is reduced if the taxpayer’s income is above certain thresholds. Taxpayers with income above the thresholds may be required to pay the AMT.
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