2023 Tax Brackets

Income Tax Brackets and Rates

The 2023 income ceiling for all listed tax brackets and for all filers, adjusted for inflation are listed below. The Seven federal income tax rates for 2023 are... 10% - 12% - 22% - 24% - 32% - 35% - 37% The marginal income tax rate of 37% will apply to taxpayers with taxable income above $539,900 (single filers), and $693,750 is the target for married couples filing jointly...(SEE Table 1)

Table 1. Tax Brackets and Rates, 2023 (Source: IRS)

Standard Deduction and Personal Exemption

2023 has standard deductions for single filers increasing by $900; $1800 for married couples filing jointly. Personal exemptions for 2023 remains at ZERO (this is due to the personal exemption from the Tax Cuts and Jobs Act 2017 )

Table 2. 2023 Standard Deduction and Personal Exemption (Source: IRS)

Alternative Minimum Tax

Created in the 1960s, The Alternative Minimum Tax (AMT) was setup to prevent high-income taxpayers from avoiding the individual income tax. This parallel tax income system requires high-income taxpayers to calculate their tax bill twice: once under the ordinary income tax system and again under the AMT. The taxpayer then needs to pay the higher of the two. More information can be found at IRS.Gov (SEE Table 3).

Table 3. 2023 Alternative Minimum Tax Exemptions (Source:IRS)

2023 still sees the AMT rate at 28%. This rate applies to excess AMTI of $220,700 for all taxpayers ($110,350 for married couples who file separate returns).



The AMT exemptions phase out at 25 cents per dollar earned once a taxpayers AMTI hits a certain threshold. In 2023, the exemption will start phasing out at $578,150 in AMTI for single filers and $1,156,300 for married taxpayers filing jointly (SEE Table 4).

Table 4. 2023 Alternative Minimum Tax Exemption Phaseout Thresholds

Earned Income Tax Credit

The 2023 Maximum Earned Income Tax Credit (EITC) for single and joint filers is $560 (no children) (SEE Table 5). The maximum credit is $3,995 for one child, $6,604 for two children, and $7,430 for three or more children. Increases are nominal.

Table 5. 2023 Earned Income Tax Credit Parameters

Qualified Business Income Deduction

Within the Tax Cuts and Jobs Act, there is an inclusion of a 20 percent deduction in 2023 for pass-through businesses with $182,100 of qualified business income for single taxpayers and $364,200 for married taxpayers filing jointly (SEE Table 6).

Table 6. 2023 Qualified Business Income Deduction Thresholds (Source:IRS)

Child Tax Credit

The maximum Child Tax Credit for 2023 is $2,000 per child who qualifies, with no adjustments for inflation. The amount that may be refunded for the Child Tax Credit is adjusted for inflation and increases from $1,500 to $1,600 in 2023.

For 2023, the first $17,000 of gifts to any person is excluded from tax. Exclusions are increased to $175,000 from $164,000 in 2023 for gifts to spouses who are not citizens of the United States.

Capital Gains, long term, are taxed using different rates and brackets compared to standard income.

Table 7. 2023 Capital Gains Tax Rates & Brackets (Source:IRS)

Federal law requires you to maintain copies of your tax returns and supporting documents for three years. This is called the “three-year law” and leads many people to believe they're safe provided they retain their documents for this period of time. Even if the original records are provided only on paper, they can be scanned and converted to a digital format. Once the documents are in electronic form, taxpayers can download them to a backup storage device, such as an external hard drive, or burn them onto a CD or DVD (don't forget to label it). Create a Backup Set of Records and Store Them Electronically. Keeping a backup set of records — including, for example, bank statements, tax returns, insurance policies, etc. — is easier than ever now that many financial institutions provide statements and documents electronically, and much financial information is available on the Internet. You might also consider online backup, which is the only way to ensure that data is fully protected. With online backup, files are stored in another region of the country, so that if a hurricane or other natural disaster occurs, documents remain safe.

Caution: Identity theft is a serious threat in today's world, and it is important to take every precaution to avoid it. After it is no longer necessary to retain your tax records, financial statements, or any other documents with your personal information, you should dispose of these records by shredding them and not disposing of them by merely throwing them away in the trash.

However, if the IRS believes you have significantly underreported your income (by 25 percent or more), or believes there may be indication of fraud, it may go back six years in an audit. To be safe, use the following guidelines.

Business Documents To Keep For One Year

• Correspondence with Customers and Vendors
• Duplicate Deposit Slips
• Purchase Orders (other than Purchasing Department copy)
• Receiving Sheets
• Requisitions
• Stenographer's Notebooks
• Stockroom Withdrawal Forms

Business Documents To Keep For Three Years

• Employee Personnel Records (after termination)
• Employment Applications
• Expired Insurance Policies
• General Correspondence
• Internal Audit Reports
• Internal Reports
• Petty Cash Vouchers
• Physical Inventory Tags
• Savings Bond Registration Records of Employees
• Time Cards For Hourly Employees

Business Documents To Keep For Six Years

• Accident Reports, Claims
• Accounts Payable Ledgers and Schedules
• Accounts Receivable Ledgers and Schedules
• Bank Statements and Reconciliations
• Cancelled Checks
• Cancelled Stock and Bond Certificates
• Employment Tax Records
• Expense Analysis and Expense Distribution Schedules
• Expired Contracts, Leases
• Expired Option Records
• Inventories of Products, Materials, Supplies
• Invoices to Customers
• Notes Receivable Ledgers, Schedules
• Payroll Records and Summaries, including payment to pensioners
• Plant Cost Ledgers
• Purchasing Department Copies of Purchase Orders
• Sales Records
• Subsidiary Ledgers
• Time Books
• Travel and Entertainment Records
• Vouchers for Payments to Vendors, Employees, etc.
• Voucher Register, Schedules

Special Circumstances

• Car Records (keep until the car is sold)
• Credit Card Receipts (keep with your credit card statement)
• Insurance Policies (keep for the life of the policy)
• Mortgages / Deeds / Leases (keep 6 years beyond the agreement)
• Pay Stubs (keep until reconciled with your W-2)
• Property Records / improvement receipts (keep until property sold)
• Sales Receipts (keep for life of the warranty)
• Stock and Bond Records (keep for 6 years beyond selling)
• Warranties and Instructions (keep for the life of the product)
• Other Bills (keep until payment is verified on the next bill)
• Depreciation Schedules and Other Capital Asset Records (keep for 3 years after the tax life of the asset)

Personal Documents To Keep For One Year

• Bank Statements
• Paycheck Stubs (reconcile with W-2)
• Canceled checks
• Monthly and quarterly mutual fund and retirement contribution statements (reconcile with year end statement)

Personal Documents To Keep For Three Years

• Credit Card Statements
• Medical Bills (in case of insurance disputes) 
• Utility Records
• Expired Insurance Policies 

Personal Documents To Keep For Six Years

• Supporting Documents For Tax Returns
• Accident Reports and Claims
• Medical Bills (if tax-related)
• Property Records / Improvement Receipts
• Sales Receipts
• Wage Garnishments
• Other Tax-Related Bills

Personal Records To Keep Forever

• CPA Audit Reports
• Legal Records
• Important Correspondence
• Income Tax Returns
• Income Tax Payment Checks
• Investment Trade Confirmations
• Retirement and Pension Records

Business Records To Keep Forever While federal guidelines do not require you to keep tax records “forever,” in many cases there will be other reasons you'll want to retain these documents indefinitely.

• Audit Reports from CPAs/Accountants
• Cancelled Checks for Important Payments (especially tax payments)
• Cash Books, Charts of Accounts
• Contracts, Leases Currently in Effect
• Corporate Documents (incorporation, charter, by-laws, etc.)
• Documents substantiating fixed asset additions
• Deeds
• Depreciation Schedules
• Financial Statements (Year End)
• General and Private Ledgers, Year End Trial Balances
• Insurance Records, Current Accident Reports, Claims, Policies
• Investment Trade Confirmations
• IRS Revenue Agents' Reports
• Journals
• Legal Records, Correspondence and Other Important Matters
• Minute Books of Directors and Stockholders
• Mortgages, Bills of Sale
• Property Appraisals by Outside Appraisers
• Property Records
• Retirement and Pension Records
• Tax Returns and Worksheets
• Trademark and Patent Registrations