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Avraham "AY"  Rappaport, CLTC

President, Financial Professional

 

Yaniv "Jay" Natanov

President, Financial Planner

 

Eli Rappaport

Vice President, Financial Planner

 

Shlomo Rosenstein

Financial Professional

 

Ozzie Marizan

Financial Planner

 

Joseph Greer

Employee Benefits Administrator

 

Dylan Pinsky

Client Relations Manager

 

Premier Financial

6395 Dobbin Road, Suite 102

Columbia, MD 21045

 

Phone:  240-309-6001

 

Email: dylan.pinsky@prudential.com

Website: premierfinancial1.com

July/August 2023

Inflation and Your Tax Bill

Adjust inflation concept

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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Premier Financial is not affiliated with Prudential Financial. Premier Financial sells insurance products of Prudential Financial's affiliated insurance companies in addition to products of non-affiliated insurance companies. Premier Financial is authorized to sell and service certain insurance products of Prudential Financial companies as well as use this material. Premier Financial and its representatives do not give tax or legal advice. Please consult with your own advisors regarding your particular situation. Offering financial planning and investment advisory services and programs through Pruco Securities, LLC (Pruco), under the marketing name Prudential Financial Planning Services (PFPS), pursuant to a separate client agreement. Offering insurance and securities products and services as a registered representative of Pruco, and an agent of issuing insurance companies. 1-800-778-2255. Dylan Pinsky is employed by Eli Rappaport and not The Prudential Insurance Company of America or its subsidiaries.
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