The following table provides some important federal tax information for 2023, as compared with 2022. Many of the dollar amount increases are higher than in past years due to inflation.
| Social Security/ Medicare | 2023 | 2022 |
| Social Security Tax Wage Base | $160,200 | $147,000 |
| Medicare Tax Wage Base | No limit | No limit |
| Employee portion of Social Security | 6.2% | 6.2% |
| Employee portion of Medicare | 1.45% | 1.45% |
| Individual Retirement Accounts | 2023 | 2022 |
| Roth IRA Individual, up to 100% of earned income | $6,500 | $6,000 |
| Traditional IRA Individual, up to 100% of earned Income | $6,500 | $6,000 |
| Roth and traditional IRA additional annual “catch-up” contributions for account owners age 50 and older | $1,000 | $1,000 |
| Qualified Plan Limits | 2023 | 2022 |
| Defined Contribution Plan limit on additions (Sections 415(c)(1)(A)) | $66,000 | $61,000 |
| Defined Benefit Plan limit on benefits (Section 415(b)(1)(A)) | $265,000 | $245,000 |
| Maximum compensation used to determine contributions | $330,000 | $305,000 |
| 401(k), SARSEP, 403(b) Deferrals (Section 402(g)), & 457 deferrals (Section 457(b)(2)) | $22,500 | $20,500 |
| 401(k), 403(b), 457 & SARSEP additional “catch-up” contributions for employees age 50 and older | $7,500 | $6,500 |
| SIMPLE deferrals (Section 408(p)(2)(A)) | $15,500 | $14,000 |
| SIMPLE additional “catch-up” contributions for employees age 50 and older | $3,500 | $3,000 |
| Compensation defining highly compensated employee (Section 414(q)(1)(B)) | $150,000 | $135,000 |
| Compensation defining key employee (officer) in a top-heavy plan | $215,000 | $200,000 |
| Compensation triggering Simplified Employee Pension contribution requirement (Section 408(k)(2)(c)) | $750 | $650 |
| Driving Deductions | 2023 | 2022 |
| Business mileage, per mile | 65.5 cents | 58.5 cents from Jan. 1 to June 30 62.5 cents from July 1 to Dec. 31 |
| Charitable mileage, per mile | 14 cents (the rate is set by statute) | 14 cents (the rate is set by statute) |
| Medical and eligible moving*, per mile | 22 cents | 18 cents from Jan. 1 to June 30 22 cents from July 1 to Dec. 31 |
| Business Equipment | 2023 | 2022 |
| Maximum Section 179 deduction | $1.16 million |
$1.08 million |
| Phase out for Section 179 | $2.89 million |
$2.7 million |
| Business Meals | 2023 | 2022 |
| General deduction for eligible business-related food and beverage expenses | 50% | 100%** |
| Transportation Fringe Benefit Exclusion | 2023 | 2022 |
| Monthly commuter highway vehicle and transit pass | $300 | $280 |
| Monthly qualified parking | $300 | $280 |
| Standard Deduction | 2023 | 2022 |
| Married filing jointly | $27,700 | $25,900 |
| Single (and married filing separately) | $13,850 | $12,950 |
| Heads of Household | $20,800 | $19,400 |
| Domestic Employees | 2023 | 2022 |
| Threshold when a domestic employer must withhold and pay FICA for babysitters, house cleaners, etc. | $2,600 | $2,400 |
| Kiddie Tax | 2023 | 2022 |
| Amount used to reduce the net unearned income reported on a child’s return that’s subject to the Kiddie Tax | $1,250 | $1,150 |
| Estate Tax | 2023 | 2022 |
| Federal estate tax exemption | $12.92 million | $12.06 million |
| Maximum estate tax rate | 40% | 40% |
| Annual Gift Exclusion | 2023 | 2022 |
| Amount you can give each recipient | $17,000 | $16,000 |
* Only available for active-duty members of the military.
** Provided by restaurants. This is part of a law signed on December 27, 2020, which provided COVID-19 relief. The 100% deduction returned to 50% in 2023.
