Social Security and Medicare
The Cost-of-Living Adjustment (COLA) for Social Security increases by 8.7% for 2023 recipients. There is also a modest decrease in the Income-Related Monthly Adjustment Amount (IRMAA) Part B and D surcharges for those with higher incomes (based on your 2021 taxable income). More details are provided in the charts to the left.
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Legislative Updates Continued
Estate and Gift Tax
The Lifetime Estate and Gift Tax Exemption Amount is now $12,920,000 per individual, and for married couples, each spouse receives this exemption. The Lifetime Amount is scheduled to reduce by 50% in 2026 and beyond. The Annual Gift Tax exclusion amount is now $17,000 per recipient of the gift.
Health Savings Account (HSA)
The maximum contribution to an HSA in 2023 is now $7,750 per family and $3,850 per individual coverage. Those over 55 years old may contribute an additional $1,000. You can only fund an HSA account if you participate in a High Deductible Health Plan. Those receiving Medicare can no longer make contributions to an HSA account.
If you have addtional questions about your specific situation, please contact us.
Changes Affecting Tax Year 2022
Tax Credits
• Child Tax Credit (CTC): Those who got $3,600 per dependent in 2021 for the CTC will get $2,000 for the 2022 tax year, if eligible.
• Earned Income Tax Credit: Eligible taxpayers with no children, who received roughly $1,500 in 2021, will get $500 in 2022.
• Child and Dependent Care Credit: These credits revert back to a maximum of $2,100 in 2022 instead of $8,000 in 2021.
Charitable Deductions
During COVID, taxpayers could take up to a $600 charitable donation "above-the-line" tax deduction on their tax returns. However, in 2022, charitable donations may only be claimed as Itemized Deductions.
Student Loan Forgiveness
The IRS has confirmed that the forgiving of student loans will not give rise to taxable income to the borrower, when the forgiveness is granted. Some states, most notably California, have not made the same confirmation for state tax purposes. We will monitor this situation.