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Tax Cuts in 2023: 6 Surprising Ways It Affects Retirees

November 25, 2022 · Personal Finance
Tax Cut
Photo by chayanuphol at Shutterstock

A smaller percentage of earnings will be subject to federal income tax

The Internal Revenue Service recently issued the inflation tax cuts for the 2023 tax year, which will apply to the tax returns that are filed in 2024.

Two of the biggest changes are regarding the standard deduction and tax brackets, both of which should mean retired folks will receive a tax cut on income next year. The standard deduction will grow by approximately 7% in 2023.

Single people will be allowed to deduct $13,850, which is up by $900, and married partners that file jointly will be allowed to deduct $27,700, which is higher by $1,800, when they calculate their taxable income.

As far as the Federal income tax brackets go, the seven marginal tax rates won’t be changing next year. But the income thresholds that define each of those brackets will increase by roughly 7% all across the board.

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