2023 Taxes and Inflation: 5 Things To Know

By Our Editorial Team | Published October 24, 2022

Expert Verified

Our editorial team verifies all financial and lifestyle information for accuracy and relevance to senior living.

3. Tax savings from the inflation adjustment – examples

The ones that will benefit the most from the changes are high-income taxpayers. Increased from $539.900 in the previous year, in 2023, the maximum marginal tax rate of 37% will apply to single filers with earnings above $578,125. When applied to single taxpayers, the new rule reduces taxes by $764.50.

Here are some detailed examples:

$578,125 – $539,900 = $38,225, which is taxable at a reduced rate in 2023;
38,225 x 0.37 = $14,143.25, which was the income tax in 2022;
the income tax in 2023, on the other hand, is calculated as: $38,225 x 0.35 = $13,378.75;
$14,143.25 – $13,378.75 = $764.50, which represents the tax savings in 2023.