It's that time of year again, and taxes loom. The increasingly complicated array of hoops to jump through complicates this time of year for so many people. As with many things in life, the stress that tax season induces can be alleviated with a modicum of education and organization. Let's review some of the basics.
What Are the Tax Brackets?
The short version is that tax brackets are the income levels at which the tax rate changes. Federal tax law dictates seven levels of progressively higher taxation based on a combination of filing status and taxable income.
As income increases, the amount of tax due also increases. Each of these thresholds is called a "Bracket" and (in the 2023 tax season) the progression is 10%, 12%, 22%, 24%, 32%, 35% and 37% of taxable income.
This year, the IRS has introduced a number of inflation adjustments to these tax brackets that can help ease the burden. This includes an increase in the amount of the earned income tax credit, an increase in exclusions for adoptions, gifts, and estates – among others.
When Can I File Taxes?
Since its introduction in 1913 with the ratification of the Sixteenth Amendment, Tax Day has usually fallen on April 15th or as soon afterward as possible.
The date may shift due to a variety of reasons. Tax Day is scheduled so as never to conflict with weekends or national holidays. It has also shifted on the calendar due to natural disasters or health crises such as the COVID pandemic of recent years.
Tax Day for 2023 is Tuesday, April 18th – but the IRS has been accepting returns since January 23rd. The exact date each year that tax filing can begin varies but is sometime in January… so, as soon as you get your W-2 form, tax preparation can begin and be filed.
Will Tax Refunds Be Bigger Next Year?
Sadly, it does not seem likely that tax refunds will be bigger this year.
Credit reporting service Experian predicts an 11% drop in the amount of this coming round of refunds. They attribute this to the lower "pay in" created by the various inflation adjustments noted above.
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