Insights

Important Tax Figures for 2023

Susan J. Horne - MST

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.

 

 


PKS & Company, P. A. is a full service accounting firm with offices in Salisbury, Ocean City and Lewes that provides traditional accounting services as well as specialized services in the areas of retirement plan audits and administration, medical practice consulting, estate and trust services, fraud and forensic services and payroll services and offers financial planning and investments through PKS Investment Advisors, LLC.

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