Inflation is changing America's 2023 tax brackets: How it affects you

Inflation is changing America's 2023 tax brackets: How it affects you

2022 has witnessed the highest consumer price increase since the 1980s. As a result, America's tax brackets are changing.

Noting that tax brackets move alongside the inflation rate, the amount of tax you pay on your income gradually shifts in normal times.

However, if your wages haven't risen enough, you are expected to fall into a lower tax bracket in 2023.

The standard deduction for married couples filing jointly for the 2023 tax year has risen to $27,700, up $1,800 from the prior year.

For single taxpayers and married individuals filing separately, the standard deduction rises to $13,850, up $900.

For heads of households, the standard deduction will be $20,800, up $1,400.

The earned income tax credit, benefitting lower-income workers, has risen by around 7%, from $6,935 (2022 tax year) to $7,430 in 2023.

The alternative minimum tax exemption amount for next year will be $81,200 for individuals and $126,500 for married couples filing jointly.