As a valued client of William Blair, we hope that our tax-related articles provide helpful information to assist you with your tax planning efforts. In addition, our Did You Know? section offers updates and highlights to help you further prepare for next year’s complex tax filing. While the information provided does not reflect tax advice, sometimes asking the right questions can facilitate conversations with your trusted tax professional.
Did You Know?
Inflation adjustments of nearly 7%: According to the AEI, taxpayers will see about a 7% change in the 2023 tax brackets versus 2022 as a result of persistently high inflation. The rates themselves didn’t change but the income ranges did, in many instances by about 7%.
Standard deduction amounts also increased about 7%, to $27,700 for married filers, and $13,850 for single filers.
The William Blair Tax Reference Guide reflects these and other current tax rates and eligibility criteria.
401(k) Limit Increases: In 2023, the IRS increases the amount investors can contribute to their qualified accounts by about 10% more per year, with the 401(k) limits rising to $22,500. In addition, IRA limits will rise to $6,500 in 2023. Catch-up provisions for investors age 50 and above will rise to $7,500. The income limits for Roth IRA will also increase, making more, higher-income investors eligible for this special tax-free retirement savings account.
Estate and Gift Tax Limit Increases: For 2023, individuals can transfer up to $12.92 million to their family and/or heirs without triggering a federal estate-tax bill (up from $12.06 million in 2022). The amount one can gift also increases in 2023, to $17,000 tax free per year.
Are you turning age 72 this year? Congratulations! Under the SECURE Act of 2019, if you turn 72 in 2023, you are no longer required to take your Required Minimum Distribution (RMD) in that same year—you will have to begin taking an RMD in the year you turn 73 (2024), and there are special provisions to delay that initial payment until April of the next year (2025).
In short, if you turn 72 this year, by rule you may be able to delay your initial RMD payment until April of 2025.
If you are currently younger than age 72, or if you have questions in general, visit the IRS website, or please consult with your tax professional.
Planning on clean energy enhancements? Under the Residential Clean Energy Credit, certain clean energy projects may still qualify for a credit of up to 30% of the cost. Visit the IRS website for complete details.
Purchasing an EV vehicle this year? The Inflation Reduction Act allows select persons to receive a credit of up to $7,500 on electric vehicle (EV) purchases, depending on the type of vehicle, and the date of purchase.
The credit is available to individuals and their businesses. To qualify, you must:
- Buy it for your own use, not for resale
- Use it primarily in the U.S.
In addition, your modified adjusted gross income (AGI) may not exceed:
- $300,000 for married couples filing jointly
- $225,000 for heads of households
- $150,000 for all other filers