1

Get started today

Schedule Your Free Consultation Today!

Please call or fill out the form below to arrange an evaluation of your situation and determine the best solution for your and your family.

"*" indicates required fields

Name*
Hidden

Free 15-Minute Consultation

tax law changes

The Internal Revenue Service has released the tax year 2023 annual inflation adjustments for dozens of tax provisions, including the tax rate schedules and other tax changes. Here are some of the key changes.

Standard deduction

The standard deduction for married couples filing jointly for tax year 2023 rises to $27,700, which is up $1,800 from the previous year. For single taxpayers and married individuals filing separately, the standard deduction rises to $13,850 for 2023, up $900, and for heads of households, the standard deduction will be $20,800 for tax year 2023, up $1,400 from the amount for tax year 2022.

Take Stock of Other Accounts

Your investment accounts, such as IRAs and transfer on death accounts, let you name beneficiaries. You set up primary beneficiaries and secondary ones, who may receive portions of the account if primary beneficiaries are unable to or disclaim their share.

If you’ve invested with a partner in joint investment accounts, there are nuances to consider. In a joint tenant with right of survivorship account, the survivor takes full asset ownership. In a tenants in common account, each of you has a set percentage of ownership. When one owner passes, the deceased’s share passes to beneficiaries.

Marginal rates

For tax year 2023, the top tax rate remains 37% for individual single taxpayers with incomes greater than $578,125 ($693,750 for married couples filing jointly).

The other rates are:

  • 35% for incomes over $231,250 ($462,500 for married couples filing jointly)
  • 32% for incomes over $182,100 ($364,200 for married couples filing jointly)
  • 24% for incomes over $95,375 ($190,750 for married couples filing jointly)
  • 22% for incomes over $44,725 ($89,450 for married couples filing jointly)
  • 12% for incomes over $11,000 ($22,000 for married couples filing jointly)

The lowest rate is 10% for incomes of single individuals with incomes of $11,000 or less ($22,000 for married couples filing jointly).

Alternative minimum tax

The AMT exemption amount for tax year 2023 is $81,300 and begins to phase out at $578,150 ($126,500 for married couples filing jointly for whom the exemption begins to phase out at $1,156,300). The 2022 exemption amount was $75,900 and began to phase out at $539,900 ($118,100 for married couples filing jointly for whom the exemption began to phase out at $1,079,800).

Estate tax

Estates of decedents who die during 2023 have a basic exclusion amount of $12,920,000, up from a total of $12,060,000 for estates of decedents who died in 2022. Note that many states have their own estate taxes, with lower exclusion amounts.

New for 2023

The Inflation Reduction Act extended certain energy related tax breaks and indexed for inflation the energy efficient commercial buildings deduction beginning with tax year 2023. For tax year 2023, the applicable dollar value used to determine the maximum allowance of the deduction is $0.54 increased (but not above $1.07) by $0.02 for each percentage point by which the total annual energy and power costs for the building are certified to be reduced by a percentage greater than 25%.

More information online

more complete summary is available on the IRS website. The full release—about 28 very technical pages—is also available for downloading. Since many of the provisions are complex, taxpayers should work with a professional to see how their situation is affected.

Contact Us For Personalized Estate Planning In Southern California

We know discussing end-of-life plans can be difficult, but we approach this delicate conversation with respect and dignity. Our estate planning services cover all areas of elder law & probate based on your specific financial & health situation. If you have additional questions or concerns regarding your estate plan, probate, special needs planning, elder or tax law, attorney Dennis M. Sandoval, and the Sandoval Legacy Group team is ready to assist you.

Southern California’s Premier Estate Planning Law Firm

With thirty-plus years of experience as an estate planning law firm in Southern California, you will have the best legal minds to guide you. The trusted estate planning lawyers at Sandoval Legacy Group, A division of Holstrom Block & Parke, A Professional Law Corporation, have offices located throughout Southern California in Orange, Riverside, San Diego, San Bernardino, and Los Angeles county. If you have questions or concerns regarding your estate plan, elder or tax law, or probate, contact us or give us a call at (888) 502-2881 to schedule a free one-hour consultation.