As 2022 draws to a close, there are certain financial figures to keep in mind for the year ahead so that you can plan and make any adjustments necessary for your finances next year. It’s no surprise that we’re still in hyper-inflationary period, and the government is continuing to rate rates and therefore the limits of many financial figures will go up next year.
401(k) Contributions
In 2023, you can expect that the new 401(k) max will be $22,500 with a $7,500 catch up if you’re over the age of 50. This is a significant increase from the 2022 figures, which stood at $20,500 with a $6,500 catch up. Take the time to ensure that you make those percentages work in your favor. The aggregate amount that you can put into a defined contribution retirement plan (which includes an employer match) is $66,000, up from $61,000 last year. In addition, the compensation amount annually that most plans will match in income is up at $330,000.
HSA Contributions
In your Health Savings Account, your 2023 contributions may max out at $7,750 for a family with a catch up of $1,000 if you’re over the age of 55. If you’re single, your maximum is $3,850. This is an increase from last year’s figures.
IRA Contributions
For IRAs, the amount you can contribute in 2023 is $6,500 with a $1,000 catch up for anyone over 50, increasing from $6,000 in 2022. The Roth IRA phase out for earnings in 2023 is $138,000 to $153,000 if you’re single. If you’re married and filing jointly, that phase out for a Roth IRA is $218,000 to $228,000.
When it comes to a Traditional IRA, your deductible contributions phase out if at $116,000 to $136,000 filing jointly and $73,000 to $83,000 when single. If just one spouse is covered by a plan, then the Tradition IRA phase out is at $218,000 to $228,000 when filing joint.
Tax Changes In 2023
In 2023, the standard deduction for those married filing jointly will be $27,700 and half of that if you’re single. The highest tax bracket for a married filing jointly couple will be $693,750 and if you’re single the highest tax bracket is $578,100. The top tax rate is 37% and you’re taxed at dollars above that income, not on the entire income.
You are required to pay Social Security tax on earnings up to $160, 200 in 2023, but once you hit that amount you won’t have further withholdings for Social Security tax. For Medicare tax, you will pay 1.45% on your income in 2023 and an additional 0.9% on income over $200,000 if you are single or $250,000 if you’re married and filing jointly.
This article was written by Andrew Rosen from Forbes and was legally licensed through the Industry Dive Content Marketplace. Please direct all licensing questions to legal@industrydive.com.
This article is being provided for educational purposes only. It does not constitute an endorsement, solicitation or offer of any particular insurance product or product type and is not intended, and should not be relied upon, as insurance, financial or tax advice.
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