PFA Updates

Key Numbers to Know for 2023

Dec 28, 2022

Hello, friends.

Inflation has enhanced some of the key values we track as financial planners. It has affected income taxes, retirement saving maximums, income limits, and more in a positive manner. 

Below is a summary of limits we think are important to know for 2023. This is by no means a comprehensive list, but rather a summary [1] of changes that impact many of our clients and directly relate to the financial strategies we strive to maximize.

If You are Saving for Retirement

  • IRA and Roth IRA maximum contributions increase to $6,500. For age 50+, the "catch-up" is $1,000 more for a total of $7,500.
  • 401-k/403-b maximum payroll deferrals increase to $22,500. For age 50+, the "catch-up" is $7,500 for a total of $30,000.
  • Health Savings Accounts (HSA) - single increases to $3,850 and family is $7,750. Age 55+, yes 55, not 50, add an additional $1,000.
  • Roth IRA income limits before contribution phaseout starts - single filer $138,000, filing joint $218,000


Income Tax Brackets and Income Limits of Interest

  • The standard deduction increases - single filer $13,850 and joint filer $27,700. Age 65+ add another $1,500.
  • Federal tax brackets for single filer: top of the 12% bracket $58,575, 22% $109,225, 24% $195,950 
  • Federal tax brackets for joint filers: top of the 12% bracket $117,150, 22% $218,450, 24% $391,900
  • The Capital Gains tax rate remains at 0% if you are within a 12% bracket.

If you are interested in starting your Social Security before Full Retirement Age (FRA), then the maximum earned income is $21,240 before phaseout. For most people these days, FRA is 67.

As an example, if you wanted to start Social Security at age 62, the maximum you could earn in a job is $21,240 before you must give some of the Social Security benefit back. In the calendar months leading up to FRA, the maximum earned income limit is $56,520. Once you hit FRA, there are no earned income limits.

If You are Feeling Generous

  • The annual gift limit is increasing to $17,000 per person. Married couples can double the amount to $34,000 per person.

Let us know if you have any questions regarding these key numbers or how they apply to your financial strategies. Happy New Year!

-      Tom

[1] IRS and Social Security Administration Updates 2023, quoted in Putnam Investments’ online publication

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