2023 CONTRIBUTION LIMITS AND STANDARD DEDUCTION ANNOUNCED

SUMMARY

Given historic inflation, the IRS has updated the annual contribution limits for every type of retirement account and increased the standard deduction.

INFLATION IMPACTS

In response to the continued rise in inflation, the IRS has adjusted the annual dollar limits an individual can contribute to his or her retirement accounts for 2023.

Table 1: 2023 contribution limits as announced by the IRS.

The deductibility phaseout range for IRA contributions will increase to $73,000-$83,000 for individuals and $116,000-$136,000 for those married filing jointly. Meanwhile, the Roth IRA income phaseout range will increase to $138,000-$153,000 for individuals and $218,000-$228,000 for those married filing jointly.

As a reminder, in most cases, 2022 employee contributions to employer plans such as 401(k)s and 403(b)s must be made by December 31, 2022. You can continue to make 2022 contributions to traditional and Roth IRAs until Tax Day, April 17, 2023, and to SEP IRAs until you file your taxes (including any extensions).

TAX DEDUCTIONS

Contribution limits aren’t the only thing rising in 2023. The standard deduction for individual filers has increased $900 from $12,950 to $13,850. For those who are married filing jointly, the deduction will increase from $25,900 to $27,700.

If you have questions about your contributions, please don’t hesitate to reach out.

Natalie Brown, CFP®
Director of Client Services & Financial Planning
Day Hagan Private Wealth

—Written 10.24.2022

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