Federal Tax Updates

Here’s what’s new for 2023:

• Alternative Minimum Tax (AMT) exemption amounts increased:
• • For single or head of household — $53,600
  • For married filing jointly or qualifying widow(er) — $83,400
  • For married filing separately — $41,700
• IRA deduction expanded — You might be able to claim a deduction if both of these apply:
  • You were covered by a retirement plan.
  • Your income was less than $71,000 — or $118,000 for married filing jointly or qualifying widow(er)

If your spouse was covered by a retirement plan but you weren’t, you might be able to claim a deduction. Your income has to be less than $193,000 to claim a deduction in this case.

• Current standard mileage rates:
  • $0.655 a mile for business use of a vehicle
  • 23.5 cents a mile for medical care
• Earned Income Tax Credit (EITC) maximum income changes are:
  • Three or more children lived with you and you earned less than $47,747 — or $53,267 if married filing jointly
  • Two children lived with you and you earned less than $52,918 — or $49,974 if married filing jointly
  • One child lived with you and you earned less than $46,560 — or $44,651 if married filing jointly
  • No children lived with you and you earned less than $17,640 — or $20,330 if married filing jointly
  • The maximum investment income you can earn and still get the EIC increased to $11,000.
• Elective salary deferrals:
  • No exceptions — maximum amount is $18,000
  • SIMPLE plans only — maximum amount is $12,500
  • 403(b) plans and qualify for the 15-year rule — maximum amount is $21,000
  • Catch-up contributions for taxpayers age 50 or over has increased to $6,000. Exceptions include for Section 401(k)(11) and SIMPLE plans