Tax Law Changes for 2023

IRA Contributions

If the taxpayer’s investment income is over $11,000 (from $10,300), the taxpayer is not eligible for the Earned Income Credit (this includes Interest, Dividends, Stocks & Real Estate Income).

Elective Deferrals
The maximum deferral to 401(k) plans, 403(b) annuities, 457 deferrals, and salary reduction SEPs increases to $22,500 (from $20,500). The maximum contribution to a SIMPLE plan increases to $15,500 (from $14,000). The “Catch-Up” contributions and elective deferrals is $30,000 (from $27,000).

IRA Deduction Phaseout
If a taxpayer is covered by a retirement plan at work, their IRA deductions may be limited if the AGI on Form 1040 is:

If Your Filing Status Is…And Your Modified AGI Is…Then You Can Take…
single or
head of household
$73,000 or lessa full deduction up to the amount of your contribution limit.
more than $73,000 but less than $83,000a partial deduction.
$83,000 or moreno deduction.
married filing jointly or qualifying widow(er)$116,000 or lessa full deduction up to the amount of your contribution limit.
more than $116,000 but less than $136,000a partial deduction.
$136,000 or more no deduction.
married filing separatelyless than $10,000 a partial deduction.
$10,000 or more no deduction.
If you file separately and did not live with your spouse at any time during the year, your IRA deduction is determined under the “Single” filing status.

Investment Income 
If the taxpayer’s investment income is over $11,000 (from $10,300), the taxpayer is not eligible for the Earned Income Credit (this includes Interest, Dividends, Stocks & Real Estate Income).

Education Credit 
The maximum American Opportunity Tax Credit (AOTC) remains $2,500 per eligible student. The maximum Lifetime Learning Credit (LLC) remains $2,000 per tax return. The phase-out range for the Lifetime Learning Credit (LLC) is $160,000 – $180,000 if married filing jointly and $80,000 – $90,000 for all other filing statuses. The phase-out range for the American Opportunity Tax Credit (AOTC) is $160,000 – $180,000 (MFJ) and $80,000 – $90,000 for all other filing statuses. If your AGI is over $90,000 ($180,000 for joint filers), you cannot claim the (AOTC) credit.

Qualified Adoption Expenses
The maximum adoption credit is $15,950 (from $14,890). The credit is phased out for taxpayers with modified adjusted gross income (MAGI) beginning at $239,230 and is completely phased out at MAGI of $279,230. The credit is NOT refundable. The credit for a special needs child is allowed for the year in which the adoption becomes final. No credit for a special needs child is allowed until the adoption becomes final.

Social Security and Medicare Wage base
Only the social security tax has a wage base limit. The wage base limit is the maximum wage that is subject to the tax for that year. For earnings in 2023, this base is $160,200 (from $147,000). There is no wage base limit for Medicare tax. All covered wages are subject to Medicare tax.

Child Tax Credit
2023 Tax Year Child Tax Credit remains at $2,000 per child under age 17 and the refundable portion increases to $1,600 (from $1,500).  For a qualifying dependent for Other Dependent Credit the amount remains at $500 (

New Standard Deduction

Filing Status2023202220212020
Head of Household$20,800$19,400$18,800$18,650
Married Filing Joint$27,700$25,900$25,100$24,800
Widow(er) w/ Dependent$27,700$25,900$25,100$24,800
Married Filing Separate$13,850$12,950$12,550$12,400


 Deductible Mileage 

YearBusinessMail CarrierCharity & VolunteerMedical & Moving
2022$0.585 (1/1-6/30) & 0.625 (7/1-12/31)$0.4725$0.14$0.18 (1/1-6/30) & $0.22 (7/1-12/31)


Transportation Industry/Truck Drivers M&IE – $59-$79 inside the continental U.S., rate varies outside the continental U.S.  If subject to the Department of Transportation (DOT) Hours Of Service rule, 80% of the amount spent for meals is deductible, rather than the 50% for other taxpayers. 

Foreign Earned Income Inclusion
If you meet certain requirements, you may qualify for the foreign earned income and foreign housing exclusions and the foreign housing deduction.

If you are a U.S. citizen or a resident alien of the United States and you live abroad, you are taxed on your worldwide income. However, you may qualify to exclude from income up to an amount of your foreign earnings that is adjusted annually for inflation ($107,600 for 2020, $108,700 for 2021 & $112,000 for 2022, $120,000 for 2023). In addition, you can exclude or deduct certain foreign housing amounts.

Certain itemized deductions are limited for taxpayers with AGI of $313,800 (MFJ), $287,650 (HOH), $156,900 (MFS), and $261,500 (S) for year 2017. Medical expenses, investment interest, and casualty and theft losses are not phased out. Beginning with tax year 2018, there is no longer a limitation on itemized deductions for higher income tax payers.

Student Loan Interest
The maximum deduction for interest paid on qualified student loans remains at $2,500 and begins to phase out at MAGI of $75,000 to $90,000 for S, HOH, QW (from $70,000-$85,000) and $155,000 to $185,000 for MFJ (from $145,000-$175,000). MFS No exclusion.

Energy Efficient Home Improvement Credit

As of January 2023, you may qualify for a  non-refundable tax credit up to $3,200 for qualifying energy efficient improvements to your home. The credit equals 30% of qualifying expenses and can be claimed for improvements made through 2032. The credit is allowed for qualifying property placed in service on or after January 1, 2023 and before January 1, 2033. There is no lifetime dollar limit.

The maximum credit you can claim each year is:

  • $1,200 for energy property costs and certain energy efficient home improvements, with limits on doors ($250 per door and $500 total), windows ($600) and home energy audits ($150)
  • $2,000 per year for qualified heat pumps, biomass stoves or biomass boilers
Residential Clean Energy Credit
If you invest in renewable energy for your home such as solar, wind, geothermal, fuel cells or battery storage technology, you may qualify for a non-refundable annual residential clean energy tax credit. The Residential Clean Energy Credit equals 30% of the costs of new, qualified clean energy property for your home installed anytime from 2022 through 2032. You can carry forward any excess unused credit, though, and apply it to reduce the tax you owe in future years. Do not include interest paid including loan origination fees.

Qualified Expenses Include:

  • Solar electric panels
  • Solar water heaters
  • Wind turbines
  • Geothermal heat pumps
  • Fuel cells
  • Battery storage technology (beginning in 2023)

Used (previously owned) clean energy property is not eligible.

Qualified expenses may include labor costs for onsite preparation, assembly or original installation of the property and for piping or wiring to connect it to the home.

Traditional building components that primarily serve a roofing or structural function generally don’t qualify. For example, roof trusses and traditional shingles that support solar panels don’t qualify, but solar roofing tiles and solar shingles do because they generate clean energy.

Clean Energy and Vehicle Credit

You may qualify for a credit up to $7,500 under Internal Revenue Code Section 30D if you buy a new, qualified plug-in EV or fuel cell electric vehicle (FCV). The Inflation Reduction Act of 2022 changed the rules for this credit for vehicles purchased from 2023 to 2032. The credit is available to individuals and their businesses. The amount of the credit depends on when you placed the vehicle in service (took delivery), regardless of purchase date.

To qualify, you must:

  • Buy it for your own use, not for resale
  • Use it primarily in the U.S.

In addition, your modified adjusted gross income (AGI) may not exceed:

  • $300,000 for married couples filing jointly 
  • $225,000 for heads of households
  • $150,000 for all other filers

You can use your modified AGI from the year you take delivery of the vehicle or the year before, whichever is less. If your modified AGI is below the threshold in 1 of the two years, you can claim the credit. You can’t apply any excess credit to future tax years. 

To qualify, a vehicle must:

  • Have a battery capacity of at least 7 kilowatt hours
  • Have a gross vehicle weight rating of less than 14,000 pounds
  • Be made by a qualified manufacturer.
    • FCVs do not need to be made by a qualified manufacturer to be eligible.
  • Undergo final assembly in North America
  • Meet critical mineral and battery component requirements (as of April 18, 2023).

The sale qualifies only if:

  • You buy the vehicle new
  • The seller reports required information to you at the time of sale and to the IRS.
    • Sellers are required to report your name and taxpayer identification number to the IRS for you to be eligible to claim the credit.

In addition, the vehicle’s manufacturer suggested retail price (MSRP) can’t exceed:

  • $80,000 for vans, sport utility vehicles and pickup trucks
  • $55,000 for other vehicles
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