Each year, the Internal Revenue Service (IRS) adjusts the federal income tax brackets for inflation and lowers the income tax deduction. -variety and taxes.

Although IRS Publication 17, Federal income taxand IRS Publication 970, Tax benefits for educationwon’t be updated until 2023, the IRS usually releases the updated payment method numbers in late October or early November.

Tax brackets

The tax rate table includes seven tax brackets, with the following averages.

Kiddie tax thresholds increased to $1,250 and $2,500.

The refundable portion of the child loan has increased to $1,600.

The maximum tax credit is $600 for no children, $3,995 for one child, $6,604 for two children and $7,430 for three or more children. The tax credit is not available if your total investment income exceeds $11,000.

The tax rates for estates and trusts have four brackets.

The standard deduction has increased slightly.

The minimum tax exemption (AMT) is $81,300 for a single filer, $126,500 for married filing jointly, $63,250 for married filing separately and $28,400 for estates and trusts.

Income thresholds for certain capital gains tax rates have increased.

Income growth

There are several levels of income for education tax benefits.

Tuition and fees have been completely waived.

Income reductions for the American Opportunity Tax Credit and the Lifetime Learning Tax Credit are not adjusted for inflation.

Income increases for Coverdell Education Savings Accounts are not adjusted for inflation.

Income exclusion

Annual gift tax exclusion: $17,000

Estate and Gift Tax Exemption: $12.92 million

Foreign income exclusion: $120,000

Retirement plan participation requirements

The Roth IRA contribution limit remains at $6,500, with an additional $1,000 contribution limit for workers age 50 and older. The income reductions for contributions are $138,000 to $153,000 (single and head of household), $218,000 to $228,000 (married filing jointly) and $0 to $10,000 (married filing separately). ).

Contribution limits for 401(k), 403(b) and 457 plans have increased to $22,500, with an additional $7,500 contribution limit for employees 50 and older.

The contribution limit for the SIMPLE retirement plan has been increased to $15,500, with a contribution limit of $3,500.

The income limits for the Saver’s Credit are $36,500 (filing separately and married), $73,000 (married filing jointly) and $54,750 (head of household).

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