The IRS has made more than 60 changes to help with the fight against inflation.
- The standard deduction for single taxpayers rises 6.94% to $13,850. The result is $900 more in tax-free income.
- The tax brackets are moving upward, too. About a third of all taxpayers apply to income between $11,000 and $44,725. This shift is just over 7%.
- Seniors will receive about 8.7% increase in payments to help manage inflation.
All of these changes will specifically help with inflation. The changes allow taxpayers to break even — no more bracket creep.
One big challenge in the U.S. is that wages aren’t adjusted to keep up with inflation, so the IRS makes the changes noted above, and also other ones, to help wage earners stay even. The U.S. has a graduated tax system, so each bracket — even the ones for high incomes, has been adjust4ed.
However, some tax credits will not be adjusted. See the Child Tax Credit as an example. The credit will be raised to 6.67%, but the maximum is staying at $2000. The Child Tax Credit is credited with being one of the best reducers of child poverty.
More info is available here. The IRS is expected to announce further adjustments soon.