2023 Federal Tax Brackets

What changed in 2023

2023 was the outlier year of the TCJA era: the IRS's inflation adjustment moved every bracket threshold up by 7.1%, the largest single-year increase since the TCJA structure took effect in 2018. The driver was the post-pandemic peak in chained CPI-U over the prior 12-month measurement period (August 2021 through August 2022). The standard deduction jumped to $13,850 single / $27,700 MFJ - increases of $900 and $1,800 over 2022, among the largest absolute increases ever. The 37% bracket began at $578,125 single / $693,750 MFJ. For a married couple with $150,000 taxable income, 2023 federal income tax was approximately $18,236, an effective rate of 12.16% - materially below the same nominal income's 2022 effective rate. The press covered headline inflation extensively but mostly missed the quiet windfall: nominal-dollar earners who held salary flat between 2022 and 2023 saw a real-terms tax cut. The Inflation Reduction Act of 2022 took effect for 2023, adding a 1% excise tax on corporate stock buybacks and creating the $7,500 EV tax credit alongside the modified Section 25C residential energy efficient property credit.