Tax Information

• Colorado – 4.63% (2016)
• Illinois – 4.95% (July 2017)
• Indiana – 3.3% (2016) (until 2017, when the rate will fall to 3.23%.
• Note also that counties may impose an additional income tax). 
• Massachusetts – 5.1% (2016)
• (most types of income)
• Michigan – 4.25% (2016)
•  (22 cities in Michigan may levy an income tax, with non-residents paying half the rate of residents)
• North Carolina – 5.75% (2016); 5.499% (2017)
• Pennsylvania – 3.07% (many municipalities in Pennsylvania assess a tax on wages: most are 1%, but can be as high as 3.9004% in Philadelphia)
• Utah – 5.0% (2016)
• As of 2016 records

• Alaska
• Florida
• Nevada
• South Dakota
• Texas
• Washington
• Wyoming

Tennessee - No tax on wages

New Hampshire - No tax on wages

•  Alabama 
•  Alaska 
•  Florida 
•  Hawaii 
•  Illinois 
•  Mississippi 
•  Nevada 
•  New Hampshire 
•  New York 
•  Pennsylvania 
•  South Dakota 
•  Tennessee 
•  Texas 
•  Washington 
•  Wyoming 

Certain restrictions apply to some states, such as age, how much income can be excluded, and other factors.

I will update this page as we get closer to the filing year. 

 The tax items for tax year 2023 of greatest interest to most taxpayers include the following dollar amounts:  

The standard deduction for married couples filing jointly for tax year 2023 rises to $27,700 up $1,800 from the prior year. 

For single taxpayers and married individuals filing separately, the standard deduction rises to $13,850 for 2023, up $900, and for heads of households, the standard deduction will be $20,800 for tax year 2023, up $1,400 from the amount for tax year 2022.   

Marginal Rates: For tax year 2023, the top tax rate remains 37% for individual single taxpayers with incomes greater than $578,125 ($693,750 for married couples filing jointly).  The other rates are:   35% for incomes over $231,250 ($462,500 for married couples filing jointly); 32% for incomes over $182,100 ($364,200 for married couples filing jointly); 24% for incomes over $95,375 ($190,750 for married couples filing jointly); 22% for incomes over $44,725 ($89,450 for married couples filing jointly); 12% for incomes over $11,000 ($22,000 for married couples filing jointly).   

The lowest rate is 10% for incomes of single individuals with incomes of $11,000 or less ($22,000 for married couples filing jointly).The Alternative Minimum Tax exemption amount for tax year 2023 is $81,300 and begins to phase out at $578,150 ($126,500 for married couples filing jointly for whom the exemption begins to phase out at $1,156,300). The 2022 exemption amount was $75,900 and began to phase out at $539,900 ($118,100 for married couples filing jointly for whom the exemption began to phase out at $1,079,800).   

The tax year 2023 maximum Earned Income Tax Credit amount is $7,430 for qualifying taxpayers who have three or more qualifying children, up from $6,935 for tax year 2022. The revenue procedure contains a table providing maximum EITC amount for other categories, income thresholds and phase-outs.   

For tax year 2023, the monthly limitation for the qualified transportation fringe benefit and the monthly limitation for qualified parking increases to $300, up $20 from the limit for 2022.   

For the taxable years beginning in 2023, the dollar limitation for employee salary reductions for contributions to health flexible spending arrangements increases to $3,050. For cafeteria plans that permit the carryover of unused amounts, the maximum carryover amount is $610, an increase of $40 from taxable years beginning in 2022.   

For tax year 2023, participants who have self-only coverage in a Medical Savings Account, the plan must have an annual deductible that is not less than $2,650, up $200 from tax year 2022; but not more than $3,950, an increase of $250 from tax year 2022. 

For self-only coverage, the maximum out-of-pocket expense amount is $5,300, up $350 from 2022. 

For tax year 2023, for family coverage, the annual deductible is not less than $5,300, up from $4,950 for 2022; however, the deductible cannot be more than $7,900, up $500 from the limit for tax year 2022. For family coverage, the out-of-pocket expense limit is $9,650 for tax year 2023, an increase of $600 from tax year 2022.   For tax year 2023, the foreign earned income exclusion is $120,000 up from $112,000 for tax year 2022.Estates of decedents who die during 2023 have a basic exclusion amount of $12,920,000, up from a total of $12,060,000 for estates of decedents who died in 2022.   

The annual exclusion for gifts increases to $17,000 for calendar year 2023, up from $16,000 for calendar year 2022.   

The maximum credit allowed for adoptions for tax year 2023 is the amount of qualified adoption expenses up to $15,950, up from $14,890 for 2022

For tax year 2023, there are several adjustments and dollar amounts that taxpayers should be aware of:

1. Standard Deduction:

• Married couples filing jointly: $27,700 (an increase of $1,800 from the previous year)
• Single taxpayers and married individuals filing separately: $13,850 (an increase of $900)
• Heads of households: $20,800 (an increase of $1,400)

1. Marginal Rates:

• The top tax rate remains 37% for single taxpayers with incomes over $578,125 and married couples filing jointly with incomes over $693,750.
• Other rates range from 35% to 10% based on income thresholds.

1. Alternative Minimum Tax (AMT) Exemption:

• The AMT exemption amount for tax year 2023 is $81,300 and begins to phase out at $578,150 for single taxpayers (phase-out begins at $126,500 for married couples filing jointly).

1. Earned Income Tax Credit (EITC):

• The maximum EITC amount for tax year 2023 is $7,430 for qualifying taxpayers with three or more qualifying children.

1. Qualified Transportation Fringe Benefit and Parking:

• The monthly limitation for both qualified transportation fringe benefit and qualified parking increases to $300 for tax year 2023.

1. Health Flexible Spending Arrangements (FSAs):

• The dollar limitation for employee salary reductions for contributions to health FSAs increases to $3,050 for taxable years beginning in 2023.
• The maximum carryover amount for unused amounts in cafeteria plans is $610.

1. Medical Savings Account (MSA):

• For self-only coverage, the MSA annual deductible ranges from $2,650 to $3,950 (up $200 from 2022) and the maximum out-of-pocket expense is $5,300 (up $350).
• For family coverage, the MSA annual deductible ranges from $5,300 to $7,900 (up $500) and the out-of-pocket expense limit is $9,650 (up $600).

1. Foreign Earned Income Exclusion:

• The foreign earned income exclusion for tax year 2023 is $120,000 (up from $112,000 for 2022).

1. Estate Tax:

• For estates of decedents who die in 2023, the basic exclusion amount is $12,920,000 (up from $12,060,000 in 2022).

1. Gift Tax:

• The annual exclusion for gifts increases to $17,000 for calendar year 2023 (up from $16,000 in 2022).

1. Adoption Credit:

• The maximum credit allowed for adoptions for tax year 2023 is the amount of qualified adoption expenses up to $15,950 (up from $14,890 in 2022).

 To avoid falling victim to scams, it is important for taxpayers to be aware of how and when the IRS contacts them. 

The IRS primarily reaches out to taxpayers through regular mail delivered by the United States Postal Service. Most initial contacts from the IRS will be in the form of letters, referred to as "notices." These letters serve as a means of communication and provide information regarding various tax-related matters.

It is important to note that there are certain circumstances in which the IRS may call or physically visit a taxpayer's home or business. These situations include cases where a taxpayer has an outstanding tax bill, needs to submit a delinquent tax return or employment tax payment, or when a business is subject to an audit or involved in criminal investigations. However, even in such cases, taxpayers will typically receive multiple notices through mail before any phone calls or visits.

The IRS emphasizes that taxpayers should exercise caution and verify the authenticity of any contact claiming to be from the IRS.

 Even then, taxpayers will generally first receive several letters (called “notices”) from the IRS in the mail. 

 The IRS does not:

• Call to demand immediate payment using a specific payment method such as a prepaid debit card, gift card or wire transfer. Generally, the IRS will first mail a bill to any taxpayer who owes taxes.
  
  
• Demand that you pay taxes without the opportunity to question or appeal the amount they say you owe. You should also be advised of your rights as a taxpayer.
  
  
• Threaten to bring in local police, immigration officers or other law-enforcement to have you arrested for not paying. The IRS also cannot revoke your driver’s license, business licenses, or immigration status. Threats like these are common tactics scam artists use to trick victims into buying into their schemes.

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