Time for Taxes: 6 Key Changes to Know About This Season 

Nothing can be said to be certain except death and taxes, according to Ben Franklin. But this time of year, we can add one more thing: at least some tax-filing rules, deductions and exemptions. 

As you start to prepare your information to file your 2024 return, be sure you are up to speed on what’s changed for the 2023 tax year. While it’s always best to consult your tax advisor, here is a summary of some of the major changes. 

1. Tax filing dates. Most taxpayers must file by Monday, April 15. Residents of Maine and Massachusetts have until April 17 to file their federal income taxes because both states celebrate state holidays that interfere with the April 15^th deadline. If you file for a tax extension, the deadline is Tuesday, Oct. 15. While an extension gives you more time to file your return, it doesn’t give you more time to pay if you owe anything. You still will need to make an estimated payment by the April filing date – or face penalties. 

2. Standard deduction. The standard deduction for married couples filing jointly for tax year 2023 is $27,700 – an increase of $1,800 from the prior year. For single taxpayers and married individuals filing separately, the standard deduction is $13,850 for 2023, an increase of $900. For heads of households, it is $20,800, an increase of $1,400. 

3. Tax brackets. To account for inflation, the IRS adjusts tax brackets every year. (If they didn’t, you’d pay an increasingly higher marginal tax rate each year.) For tax year 2023, the top tax rate stays at 37%. That applies to individual single taxpayers with incomes greater than $578,125. For married couples filing jointly, it’s a 35% rate for those with incomes greater than $693,750. 
    
   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) 
   • 10% for incomes of $11,000 or less ($22,000 or less for married couples filing jointly
      

4. New electric vehicle (EV) deductions. You can claim a federal tax credit of up to $7,500 if you bought a new electric vehicle in 2023, or up to $4,000 if you bought a used one. Your modified adjusted gross income must be below certain set caps, though: $300,000 for married couples filing jointly; $225,000 for heads of household; $150,000 for all other filing statuses. And the EV must be one that qualifies for the deduction. 

5. FSA contributions. The limit on employee salary reductions for contributions to health flexible spending arrangements increases to $3,050. For cafeteria plans that allow carryover unused amounts, the maximum carryover amount is $610. That’s an increase of $40 from the previous year. 

6. Deduction of student-loan debt interest. This is not a change in tax law, but one that many people may have forgotten about during the pause on student-loan payments. The interest on most student loans is deductible. If you resumed making your loan payments in 2023, add up the amount of interest you paid on them during the year. You don’t even have to itemize to claim this deduction and up to $2,500 is tax deductible. 
   

For more updates, check the IRS for details. 

As you are preparing, beware of phone and Internet communications seeking to “help” people who owe taxes. Remember that the IRS never initiates contact by email, texting or social media. Instead, in almost all situations, the IRS will communicate first by postal mail. You can learn more about avoiding tax scams from the IRS directly. 

Gathering documents, preparing information and completing your return may not be fun for most people. But it can be less stressful and more productive if you don’t wait until the last minute. The time is now to start working with a tax professional or your tax filing software. You’ll have the chance to take advantage of any changes that affect you, and make sure the tax bill you are paying is accurate.