switch to caption Pat Semansky/AP On May 4, 2021, a sign can be seen outside the Internal Revenue Service building in Washington.
Pat Semansky/AP After rent, food, and gas costs rose to levels unseen in the last 40 years, the Internal Revenue Service received an increasing its inflation adjustments rating for the 2023 tax year.
Adjustments are announced every year, but in a year with strong inflation, the decision to increase the standard deduction and the income levels at which tax rates apply may result in savings for people in all income categories.
The standard deduction will increase to $13,850 for single taxpayers and married couples filing separately in 2023, an increase of $900 from 2022. Married couples filing jointly now have a $27,700 standard deduction, up $1,800 from previous year. Additionally, the standard deduction for heads of households will increase by $1,400 to $20,800 for the 2023 tax year.
The standard deduction will now be $13,850 for those who are single or filing separately from their spouses, an increase of $900 from last year. The standard deduction for those who file as heads of household will increase by $1,400 to $20,800 for the 2018 tax year.
Rent is up 7.2% from last year, electricity costs are up 15.5%, groceries are up 13%, and health insurance is nearly 30% more expensive, according to data from the Bureau of Labor Statistics last week.