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Aaron Wolgamott
Financial Advisor
Central Willamette Wealth Management Services
Located at Central Willamette Credit Union
645 Waverly Drive SE, Albany, OR 97322
Phone: 541-918-7553
Email: aaron.wolgamott@lpl.com
July/August 2023
Inflation and Your Tax Bill
Inflation is measured by changes over time in the price of a fixed basket of goods and services that represent the everyday purchases of U.S. households. Each year, the IRS makes adjustments for inflation to certain items used to prepare your income tax return.
These items include income-tax brackets, standard deductions, capital gains income thresholds, the earned income tax credit, and retirement plan and IRA contribution limits, among others. All are adjusted to reflect inflation during the previous year, based on the Chained Consumer Price Index for All Urban Consumers (Chained CPI-U).
But some items that can have an impact on your tax bill are not adjusted for inflation.
Social Security Benefits
Although Social Security benefits generally receive a cost-of-living adjustment each year, the income thresholds at which benefits are taxed have remained the same: $25,000 for single filers and $32,000 for married taxpayers filing jointly. Depending on your income, up to 85% of your benefits could be taxed.Home Sale Tax Exclusion
The amount of gain on a home sale that can be excluded from tax remains at $250,000 for single filers and $500,000 for married joint filers, despite increases in housing prices. You must have lived in your home for at least two of the last five years before the sale to claim the exclusion and haven’t claimed an exclusion in the previous two years.Surtax on Investment Income for High Income Individuals
A surcharge of 3.8% on net investment income, such as dividends, interest, and capital gain, applies to single filers with modified AGI over $200,000, and married joint filers with modified AGI over $250,000. In addition, the 0.9% surtax on earned income, including wages and self-employment income, is not inflation adjusted.Your tax professional can help you make the most of any deductions and credits you may qualify for that can lower your tax bill.
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Aaron Wolgamott is a financial advisor with, and securities and advisory services are offered through LPL Financial (LPL), a registered investment advisor and broker-dealer (member FINRA/SIPC). Insurance products are offered through LPL or its licensed affiliates. Central Willamette Credit Union and Central Willamette Wealth Management Services are not registered as a broker/dealer or investment advisor. Registered representatives of LPL offer products and services using Central Willamette Wealth Management Services, and may also be employees of Central Willamette Credit Union. These products and services are being offered through LPL or its affiliates, which are separate entities from and not affiliates of, Central Willamette Credit Union or Central Willamette Wealth Management Services. Securities and insurance offered through LPL or its affiliates are:
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