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Economy

The IRS Will Let You Keep More Of Your Paycheck In 2023

All seven tax bracket levels will be revised upwards in 2023, allowing filers to shield more of their money from taxes.

The IRS Will Let You Keep More Of Your Paycheck In 2023
AP
By James Packard
SMS
October 20, 2022

A tweak to the U.S. tax code aims to put more money back in Americans' pockets.

Starting in January, the IRS will allow Americans to keep more of their paychecks upfront and deduct more of it tax free when filing season comes the following year.

All seven income tax brackets are adjusting upward 7%, with the standard deduction climbing to $13,850 for individuals and $27,700 for married couples — up $900 and $1,800 respectively.

The move is intended to ease the burden of inflation, as persistent high prices strain American budgets.

"Gas has become more expensive, everything has become more expensive," said Norma Cable, with Community Food Bank of Southern Arizona. "Someone who has a full-time job just can't make those ends meet anymore with the same amount of money that's coming in."

A slew of other changes are coming too, including an increase in the amount of cash a person can gift to someone without incurring a tax penalty: up to $17,000 from $16,000 for this calendar year.

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It will also add to relief for workers like Nikki Hendricks-Bolling, a fifth grade reading teacher in Florida. 

"I am about to purchase about 40 pairs of headphones," she said.

Hendricks-Bolling and teachers all over the country will get a little more relief this tax season after the IRS announced a small increase in the deductions allowed for teachers' out-of-pocket expenses: up to $300 dollars from $250.

"I would say I'm probably closer to maybe the $5-600 mark a year, but there was a time where I easily spent $1,200," Hendricks-Bolling said.

"It is necessary but not [a] sufficient amount of money for what our teachers pour into their classrooms and into their students," said Jennifer Hill, vice president of policy and programming at the Nashville Public Education Foundation.

Still, it's a cost-of-living adjustment the U.S. hasn't seen in decades — a sign that high prices are here to stay, and Americans will just have to adapt to them.