4. Other changes you need to know about

According to the IRS, more than 60 tax laws are affected by the yearly inflation indexing adjustment. There are 2 major changes: in 2023, qualified taxpayers who have 3 or more children will be eligible for a $7,430 earned income tax credit. The number is a bit higher compared to the maximum allowed in 2022, which was $6,935.

In addition to that, in 2023, a person’s estate might avoid paying federal estate tax on the first $12.92 million in value, which is an increase from the $12.06 million threshold in 2022.

However, don’t get your hopes up, because there is some bad news about inflation indexing: the tax code’s monetary penalties, such as the penalty for failing to submit a return, would increase as well.