There are many reasons to celebrate a new year, and one thing to be thankful for are a few tax changes that may benefit you in 2023.
The IRS will raise the “brackets,” the top amounts in all seven federal income tax brackets, in 2023, which means workers will see more of their earnings taxed at a lower rate. This should, in essence, have the effect of increasing your take-home pay. You should review your paycheck and remember that participating in an individual retirement program, or increasing the amount you stash into a retirement program, may benefit you by keeping your pay level below a certain tax bracket. This strategy can help you pay less in taxes and save more for retirement.
There is also good news for retirees. If you are retired and receiving Social Security payments, due to the 2023 Cost of Living Adjustment increases, your checks will increase by 8.7 percent in 2023. Also, the Medicare part B premium will decrease from $170.10 to $164.90, which leaves more money in the SSA recipient’s check to spend. The maximum Social Security benefit for a worker retiring at full retirement age (which is 67 if born after 1960) also will increase to $3,627. Therefore, you should consider whether it is beneficial to delay your date of retirement until at least age 67.
As always, to start a new year, you not only should make your resolutions, but also ensure you have all the legal documents you need in place. If you had any changes in your family in 2022, such as the birth of a child, a marriage, a death or a divorce, you should review and make changes to your beneficiaries on all accounts, your last will and testament and other financial plans. Likewise, relocation or employment changes in 2022 may necessitate updating your legal documents. This should be a helpful start to 2023, and getting your legal documents in order is another step to a great future.