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Important Information for the 2023 Tax Season

February 15, 2024

As we approach the 2023 tax filing deadline, we wanted to reach out to provide you with some information that may be helpful.

Furthermore, the current tax laws are constantly changing, especially with the sunsetting of the Tax Cuts and Jobs Act at the end of 2025. With all the changes, it can be difficult to understand all available tax opportunities–and prepare in advance for likely changes. That's why it's essential to work with a financial and tax professional to help you manage your deductions and your liability.

Some key information that may be helpful as you prepare your 2023 taxes include:

The Standard Deduction Increased Slightly

After an inflation adjustment, the 2023 standard deduction increased to $13,850 for single filers and married couples filing separately. For married couples filing jointly, the standard deduction rises to $27,700.

Itemized Deduction Rules Largely Unchanged

  • State and local taxes: The deduction for state and local income taxes, property taxes, and real estate taxes is capped at $10,000.
  • Mortgage interest deduction: The mortgage interest deduction is limited to $750,000 of debt. But people who had $1,000,000 of home mortgage debt before December 16, 2017, will still be able to deduct the interest on that loan.
  • Medical expenses: Only medical expenses that exceed 7.5% of adjusted gross income (AGI) can be deducted in 2023.
  • Charitable donations: In 2023, the annual income tax deduction limit for gifts of cash to public charities is 60% of adjusted gross income.

Child Tax Credit

Filers can continue claiming a $2,000 Child Tax Credit for each dependent under 17 years old. The credit is also subject to a phase-out starting at $400,000 for joint filers and $200,000 for single filers.

Alternative Minimum Tax Exemption Increased

Until the AMT exemption–enacted by the Tax Cuts and Jobs Act–expires at the end of 2025, AMT will continue to affect households with incomes over $500,000. For 2023, the AMT exemptions are $81,300 for single filers and $126,500 for married taxpayers filing jointly. The phase-out thresholds are $1,156,300 for married taxpayers filing a joint return and $578,150 for all other taxpayers.

Higher Exclusion for Annual Tax-Free Gifts

The estate and gift tax exemption, which is indexed to inflation, rose to $12,920,000 per individual for 2023. This amount is expected to be cut by potentially 50% when the Tax Cuts and Jobs Act sunsets at the end of 2025, providing many with an opportunity to prepare ahead.

The annual gift exclusion increased to $17,000 per recipient, up $1,000 from 2022. The gifting exclusion allows you to gift money each year without incurring any tax liability or using up any of your lifetime estate.

The email is designed to provide a high-level overview, and taxpayers should, of course, consult with their tax professional to assess their specific situation. We work with our clients in partnership with their tax professionals to help them navigate the tax laws. Our goal is to make clients aware of all the applicable tax opportunities.