Contribution Limit Changes for 2023

Interest rates have been rapidly increasing, reaching a four-decade high as of June 2022. To combat inflation, the IRS recently released adjusted contribution limits, standard deductions, and tax brackets for 2023.

Contribution Limits

Those with Traditional or Roth IRAs will see an increase of $500, making the 2023 contribution limit $6,500. The catch-up contribution limit for IRAs remains at $1,000 for those aged 50 or over. 

The income phase-out range for taxpayers making contributions to a Roth IRA has increased between $138,000 and $153,000 for singles and heads of household respectively, compared to the current $129,000 and $144,000 amounts. For married couples filing jointly, the income phase-out range increased between $218,000 and $228,000, compared to the current $204,000 and $214,000. 

For individuals with a 401(k) plan the contribution limit is $22,500 for 2023, an increase of $2,000 from this year. 401(k) catch-up contribution limits for individuals 50 and older increased by $1,000 to $7,500 for 2023. This means individuals age 50 or older with a 401(k) can set aside up to $30,000 in the upcoming year. 

The SIMPLE retirement account limit for 2023 is $15,500, up from $14,000. The catch-up contribution limit for employees age 50 and over who participate in SIMPLE plans increased by $500 to $3,500.

Standard Deductions

For 2023 standard deduction rates increased to the following:

    • Single taxpayers $13,850 – Up from $12,950
    • Married Couples $27,700 – Up from $25,900
    • Head of Households $20,800 – Up from $19,400

Tax Brackets

All seven federal tax brackets were increased for 2023. This will allow more earnings to be taxed at lower rates generating more take-home pay for each individual.

Single Filing Individual Return
Tax Rate 2023 Taxable Income 2022 Taxable Income
10% $0 to $11,000 $0 to $10,275
12% Over $11,000 to $44,725 Over $10,275 to $41,775
22% Over $44,725 to $95,375 Over $41,775 to $89,075
24% Over $95,375 to $182,100 Over $89,075 to $170,050
32% Over $182,100 to $231,250 Over 170,050 to $215,950
35% Over $231,250 to $578,125 Over $215,950 to $539,900
37% Over $578,125 Over $539,900
Married Filing Joint Return
Tax Rate 2023 Taxable Income 2022 Taxable Income
10% $0 to $22,000 $0 to $20,550
12% Over $22,000 to $89,450 Over $20,550 to $83,550
22% Over $89,440 to $190,750 Over $83,550 to $178,151
24% Over $190,750 to $364,200 Over $178,151 to $340,100
32% Over $364,200 to $462,500 Over $340,100 to $431,900
35% Over $462,500 to $693,750 Over $431,900 to $647,850
37% Over $693,750 Over $647,850

 

MIDLAND TRUST COMPANY, NOR ITS AFFILIATES OR SUBSIDIARIES (COLLECTIVELY REFERRED TO AS “MIDLAND”), IS NOT A FIDUCIARY: Midland’s role as the Custodian and/or Administrator of self-directed retirement accounts is non-discretionary and/or administrative in nature. The account holder or his/her authorized representative must direct all investment transactions and choose the investment(s) for the account and is responsible for conducting his/her own due diligence. Midland has no responsibility or involvement in selecting or evaluating any investment and does not conduct any due diligence on any investment. Nothing contained herein shall be construed as investment, legal, tax, or financial advice or as a guarantee, endorsement, or certification of any investments.

 

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