Drakula & Co. | Moment | Getty ImagesAfter a year of soaring prices, the IRS made annual inflation adjustments for dozens of tax provisions, including the federal income tax brackets for 2023, which may affect next year's taxes, experts say.
While the rates didn't change, the brackets show the federal income taxes you'll owe on each portion of your taxable income, which is calculated by subtracting the greater of the standard or itemized deductions from your adjusted gross income.
The goal of yearly inflation adjustments is to offset "tax rate bracket creep," he said, which happens when you owe more income taxes after wage increases without economic benefit due to inflation.
How the 2023 federal income tax brackets changedThere was roughly a 7% change in the federal income tax brackets from 2022 to 2023, said Kyle Pomerleau, senior fellow and federal tax expert with the American Enterprise Institute.
How to prepare for 2023 tax bracket changesWith tax law changes going into effect and others being proposed, 2023 may be "another year for the record books in terms of tax complexity and tax refund volatility," Steber said.