IRS changes for 2023 can boost paychecks, lower taxes – By Kelly Tyko (Axios) / Jan 2, 2023
New tax brackets and standard deductions are now in effect, potentially boosting paychecks and lowering income tax for many Americans, who enter the new year still reeling from sky-high prices.
The big picture: The Internal Revenue Service made a few other changes to account for inflation, including raising contribution limits for tax-deferred retirement plans in 2023 and a 3-cent increase to the mileage rate.
- The higher limits to 401(k) plans can help people save more for retirement, which in many cases will help lower their income tax.
- The new tax adjustments apply to tax returns filed in 2024, but the IRS also changed the 2023 tax withholding tables, which determine how much money employers should withhold from employee wages in paychecks for federal taxes.
Why it matters: Cost of living adjustments like those on taxes, Social Security payments and wages that may have previously gone unnoticed are now crucial in the era of high inflation, Axios’ Emily Peck explains.
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