Important Tax Figures for 2023
Posted on January 4th, 2023
Every year, the amounts allowed for various federal tax benefits are subject to change based on inflation adjustments and legislation. Here are some tax figures for 2023, compared with 2022, including the estate tax exemption, Social Security wage base, qualified retirement plan and IRA contribution limits, driving deductions and more. Good news: Many increases are higher than in past years due to inflation.
The following table provides some important federal tax information for 2023, as compared with 2022. Many of the dollar amount increases are higher than in past years due to inflation.
| Social Security/ Medicare | 2023 | 2022 |
| Social Security Tax Wage Base | $160,200 | $147,000 |
| Medicare Tax Wage Base | No limit | No limit |
| Employee portion of Social Security | 6.2% | 6.2% |
| Employee portion of Medicare | 1.45% | 1.45% |
| Individual Retirement Accounts | 2023 | 2022 |
| Roth IRA Individual, up to 100% of earned income | $6,500 | $6,000 |
| Traditional IRA Individual, up to 100% of earned Income | $6,500 | $6,000 |
| Roth and traditional IRA additional annual “catch-up” contributions for account owners age 50 and older | $1,000 | $1,000 |
| Qualified Plan Limits | 2023 | 2022 |
| Defined Contribution Plan limit on additions (Sections 415(c)(1)(A)) | $66,000 | $61,000 |
| Defined Benefit Plan limit on benefits (Section 415(b)(1)(A)) | $265,000 | $245,000 |
| Maximum compensation used to determine contributions | $330,000 | $305,000 |
| 401(k), SARSEP, 403(b) Deferrals (Section 402(g)), & 457 deferrals (Section 457(b)(2)) | $22,500 | $20,500 |
| 401(k), 403(b), 457 & SARSEP additional “catch-up” contributions for employees age 50 and older | $7,500 | $6,500 |
| SIMPLE deferrals (Section 408(p)(2)(A)) | $15,500 | $14,000 |
| SIMPLE additional “catch-up” contributions for employees age 50 and older | $3,500 | $3,000 |
| Compensation defining highly compensated employee (Section 414(q)(1)(B)) | $150,000 | $135,000 |
| Compensation defining key employee (officer) in a top-heavy plan | $215,000 | $200,000 |
| Compensation triggering Simplified Employee Pension contribution requirement (Section 408(k)(2)(c)) | $750 | $650 |
| Driving Deductions | 2023 | 2022 |
| Business mileage, per mile | 65.5 cents | 58.5 cents from Jan. 1 to June 30 62.5 cents from July 1 to Dec. 31 |
| Charitable mileage, per mile | 14 cents (the rate is set by statute) | 14 cents (the rate is set by statute) |
| Medical and eligible moving*, per mile | 22 cents | 18 cents from Jan. 1 to June 30 22 cents from July 1 to Dec. 31 |
| Business Equipment | 2023 | 2022 |
| Maximum Section 179 deduction | $1.16 million | $1.08 million |
| Phase out for Section 179 | $2.89 million | $2.7 million |
| Business Meals | 2023 | 2022 |
| General deduction for eligible business-related food and beverage expenses | 50% | 100%** |
| Transportation Fringe Benefit Exclusion | 2023 | 2022 |
| Monthly commuter highway vehicle and transit pass | $300 | $280 |
| Monthly qualified parking | $300 | $280 |
| Standard Deduction | 2023 | 2022 |
| Married filing jointly | $27,700 | $25,900 |
| Single (and married filing separately) | $13,850 | $12,950 |
| Heads of Household | $20,800 | $19,400 |
| Domestic Employees | 2023 | 2022 |
| Threshold when a domestic employer must withhold and pay FICA for babysitters, house cleaners, etc. | $2,600 | $2,400 |
| Kiddie Tax | 2023 | 2022 |
| Amount used to reduce the net unearned income reported on a child’s return that’s subject to the Kiddie Tax | $1,250 | $1,150 |
| Estate Tax | 2023 | 2022 |
| Federal estate tax exemption | $12.92 million | $12.06 million |
| Maximum estate tax rate | 40% | 40% |
| Annual Gift Exclusion | 2023 | 2022 |
| Amount you can give each recipient | $17,000 | $16,000 |
* Only available for active-duty members of the military.
** Provided by restaurants. This is part of a law signed on December 27, 2020, which provided COVID-19 relief. The 100% deduction returned to 50% in 2023.