Making Sense of 2023 Tax Brackets and Rates
Taxes play a critical role in determining how long your income may last in retirement. The more you pay in taxes, the less you will have available to spend in retirement. However, understanding how your income is taxed is complicated. That’s because not all income is taxed the same way or at the same rates, and some may not be subject to taxes at all. To add to the complexity, your federal taxable income, which is your income after you’ve subtracted any deductions, is divided into seven brackets, which are adjusted annually for inflation. The 2023 tax brackets and rates are as follows:
How do tax brackets work?
While it's important to understand how federal tax brackets and rates work, they’re only one piece of the puzzle when it comes to determining your individual tax burden. Other variables include the alternative minimum tax (AMT), which ensures certain taxpayers pay a minimum amount of income tax; state taxes, which are calculated separately and vary by state; and above-the-line deductions and tax credits that further reduce the amount of tax you owe, even if you don’t itemize. These adjustments to income are considered above-the-line because they are subtracted from your gross income before calculating your adjusted gross income (AGI). With so many variables, it’s important to consult with a professional tax advisor who can provide advice specific to your circumstances. Keep in mind, this material is provided for informational purposes only and is not intended as tax advice.
If you have questions about tax-smart strategies for managing income in retirement, contact the office to schedule time to talk.
1 “2023 Tax Brackets.” Tax Foundation, 18 Oct. 2022. https://taxfoundation.org/2023-tax-brackets/
Ready to Get Your Fitness Goals Back on Track? Start SLOW.
Did you know that 80% of all resolutions for the new year fail or are abandoned by the second week of February? While there are many reasons for this, one reason why people give up on health and fitness goals is because their initial goals were overly ambitious. That doesn’t mean you can’t get back on track toward a healthier lifestyle, and this month may be the perfect time to do so.
This February marks the 57th annual American Heart Month, when the nation spotlights heart disease, the leading cause of death among American adults. The main goal of American Heart Month is to promote awareness and involvement. The American Heart Association and National Heart, Lung, and Blood Institute suggest different ways people can get involved to benefit themselves, family members, friends, and their communities, including:
If you’re looking for heart healthy ways to get your fitness goals back on track this month, consider if starting SLOW may benefit you:2, 3
Prioritizing self-care is an important way to maintain a sense of well-being at every stage of your life. Contact the office to schedule time to talk about how a comprehensive retirement strategy can support your health and lifestyle goals throughout your years in retirement.
1 “Why Your New Year’s Resolution Already Failed.” InsideHook, 19 Jan 2022, https://www.insidehook.com/article/advice/why-your-new-years-resolution-already-failed
This information was written by KRW Creative Concepts, a non-affiliate of the broker-dealer.
This communication is designed to provide accurate and authoritative information on the subjects covered. It is not, however, intended to provide specific legal, tax, or other professional advice. For specific professional assistance, the services of an appropriate professional should be sought.
Retire Wise | February 2023
February 16, 2023