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IRS sets higher tax brackets, standard deduction for 2023 as inflation rages
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The Internal Revenue Service this week announced higher inflation adjustments for the 2023 tax year as it takes into account the relentless increase in the cost of basic goods like food, rent and gasoline.
The higher limits for the federal income tax bracket and standard deductions are intended to avoid a phenomenon known as "bracket creep," which happens when taxpayers are pushed into higher-income brackets even though their purchasing power is essentially unchanged due to steeper prices for most goods.
The IRS makes such adjustments annually, but in times of painfully high inflation, the increases are more significant and impactful for taxpayers. The government reported last week that the consumer price index, which measures a basket of everyday goods, rose 8.2% in September, much faster than expected. Core prices, excluding gasoline and food, jumped 6.6%, the fastest since 1982.
This year, the tax brackets are shifting higher by about 7%.
INFLATION SURGED MORE THAN EXPECTED IN SEPTEMBER AS PRICES REMAIN PAINFULLY HIGH
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