The Internal Revenue Service (IRS) has announced it will raise the standard deduction and all of the federal income tax brackets amid rising inflation.
The standard deduction is a fixed amount that taxpayers can remove from their taxable income in place of itemizing their deductions. That figure stood at $12,950 for individual filers in the tax year 2022 and will rise to $13,850 for 2023. The figure is doubled for married couples filing jointly. Heads of households will receive a boost of $1,400 to a new total of $20,800.
The 2017 Tax Cuts and Jobs Act nearly doubled the standard deduction from $6,350 to $12,000 for an individual filer and from $12,700 to $24,000 for married couples filing jointly.
Individual tax brackets maintain the same percentages, though the IRS has raised the income threshold to enter a new bracket across the board.
Consumer prices increased by 0.4% in September, continuing a trend of high inflation that has surpassed 8% for the year. That increase in cost of living has resulted in real wage decline, with over 70% of workers in one survey saying that salary increases were not keeping up with rising prices.
Other federal agencies have recognized the strain of mounting inflation. The Social Security Administration announced last week that it would impose an 8.7% cost of living adjustment increase on benefits, beginning next year, per the Associated Press.