Posted BY: Kara | NwoReport
New changes to the Internal Revenue Service’s policies for 2023 will see lower taxes for some Americans, as the revised rules come into effect.
Rising costs have prompted the tax service to implement several changes affecting millions of citizens, as more deal with higher prices.
Cost of living adjustments, including retirement savings, taxes, Social Security payments, and wage growth, has now become an immediate issue for many Americans, as families begin to struggle with finances.
The Social Security Administration in late 2021 was forced by the cost of living increases to raise benefits for approximately 70 million Americans in 2022.
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Contribution Limits are Raised to Offset Price Gains
The IRS announced higher federal income tax brackets and standard deductions for 2023, which could offset inflation-related adjustments, with a potential boost to paychecks and lower taxes for millions of citizens.
The federal tax agency will introduce higher contribution limits for 401(k) retirement plans to help people save more for retirement and lower their income tax rates in some cases.
There was also a 3-cent boost to the mileage rate for tax-deductible business travel expenses to assist with the rise in gas prices, which is now at 65.5 cents per mile driven.
The amount that Americans can contribute to their 401(k), 403(b), and most 457 plans, will go up to $22,500, up from the $20,500 contribution limit in 2022.
Meanwhile, annual contribution limits for IRAs have increased by $6,500 in 2023, up from last year’s limit of $6,000.
Income ranges—which determine eligibility for making deductible contributions to traditional IRAs, Roth IRAs contributions, and Saver’s Credit claims—have all increased in 2023, according to the IRS.
