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Taxes
IRS 2023 Tax Adjustments Don’t Keep Up With Inflation
The tax bracket changes, standard deduction hike, and savings contribution limits increases are lower than the CPI rate
The IRS announced major changes in both savings and taxes brackets, including standard deductions for the 2023 tax year. As a result, taxpayers have a chance with these higher limits to recoup some of the huge dents that inflation has been making in their take-home pay.
However, as will be seen below, the inflation adjustments do not seem to be catching up with the actual rates of inflation that Americans are experiencing.
Savings Contribution Limits
The IRS has raised the amounts that taxpayers can contribute to their savings plans annually for next year. On Oct. 21 the IRS announced that annual 401(k) contribution limits will be $22,500 and IRA limits will be $6,500.
The 401(k) limits are $2,000 higher, up from $2,000, and the IRA limit is up $500, from $6,000. The 401(k) changes also include 403(b) plans, most 457 plans, and the federal government’s Thrift Savings Plan.
Taxpayers can deduct contributions to a traditional IRA if they meet certain conditions. This means that…
