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Steven J. Hudgins
First Vice President/ Investments
CA Insurance Lic. #0B32062
Julia C. Anderson
Senior Registered Client Service Associate
Stifel, Nicolaus & Company, Incorporated
1420 Rocky Ridge Drive, Suite 340
Roseville, CA 95661
Phone: (916) 774-3706
TollFree: (866) 498-6682
Fax: (916) 626-3313
Email: steven.hudgins@stifel.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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Securities offered through Stifel, Nicolaus & Company, Incorporated. 501 N. Broadway, St. Louis, Missouri 63102. Member SIPC and NYSE
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