As we navigate through the 2023 tax year, it's important to stay informed about the various tax changes that could affect your tax planning and filings. Below is a simplified summary of the key income tax updates for this year:
Education Savings Bond Program:
For married couples filing jointly, the income phase-out begins at $137,800.
For single filers, qualifying widow(er)s, and heads of household, the phase-out starts at $91,850.
Qualified Long-Term Care Insurance Deduction Limits:
Age 40 or younger: $480
Age 41 to 50: $890
Age 51 to 60: $1,790
Age 61 to 70: $4,770
Age over 70: $5,960
Long-Term Care Per Diem Limitation:
The 2023 per diem limit for long-term care insurance benefits is $420.
Social Security Taxable Earnings:
For 2023, the earnings limit subject to Social Security tax is $160,200.
Saver's Credit AGI Limits:
Married filing jointly: $73,000 AGI limit
Head of Household: $54,750 AGI limit
All other filers: $36,500 AGI limit
Health FSA Contributions:
Maximum contribution for 2023 is $3,050.
Up to $610 of the unused amount may be carried over, if your plan allows.
Affordable Care Act (ACA) Subsidies Expansion:
Under the ARPA, individual subsidies for ACA plans are increased, extending benefits to more taxpayers, including those previously ineligible due to income.
Small Business Health Insurance Premium Tax Credit:
Employers with fewer than 25 full-time equivalent employees (FTEs) paying average wages under $61,400 may be eligible for a tax credit.
ACA Shared Responsibility Penalties:
For large employers not offering health insurance: $2,880 annual penalty ($240 per month).
For large employers that do offer insurance, but employees get a tax credit through an exchange: $4,320 annual penalty ($360 per month).
Health Savings Account (HSA) Limits:
Minimum deductible for self-only High Deductible Health Plan (HDHP): $1,500; max out-of-pocket: $7,500; max contribution: $3,850.
Minimum deductible for family HDHP: $3,000; max out-of-pocket: $15,000; max contribution: $7,750.
Additional catch-up contribution for those 55 and older: $1,000.
2023 Standard Mileage Rates:
Business travel: 65.5 cents per mile.
Charitable service: 14 cents per mile.
Medical travel: 22 cents per mile.
If using the business rate, the basis reduction rate is 28 cents per mile.
Please review these changes carefully to understand how they may impact your financial planning for the current tax year. If you have any questions or need further assistance, do not hesitate to reach out.