personal finance | january 18, 2023
2023 Key Financial Numbers That You Need to Know
Retirement contribution limits, tax rates, and more information to keep in mind throughout 2023.
Key Insights
2023 contribution limits for retirement accounts have increased—including 401(k)s, 403(b)s, and Traditional, Roth, and SIMPLE IRAs.
Reduced tax rates that were introduced in 2018 will remain in effect through 2025.
Annual retirement benefit amounts for Social Security are almost double if taken at age 70 rather than starting them when eligible at age 62.
Retirement Plan Deferral Limits
| Plan | Under Age 50 | Age 50 and Over |
|---|---|---|
| 401(k), 403(b), SAR-SEP, 457(b), TSP1 | $22,5002 ($20,500 for 2022) | $30,0002 ($27,000 for 2022) |
| Traditional and Roth IRAs | $6,500 ($6,000 for 2022) | $7,500 ($7,000 for 2022) |
| SIMPLE IRA and SIMPLE 401(k) | $15,500 ($14,000 for 2022) | $19,000 ($17,00 for 2022) |
1The limit for 401(k), 403(b), governmental 457(b), and TSP (Thrift Savings Plan) plans includes pretax and designated Roth contributions. (Roth contributions are not permitted for SAR-SEP and nongovernmental 457(b) plans.) The limit for all 457(b) plans also includes employer contributions.
2Excludes nongovernmental 457(b) plans. Individual plan limits may be lower. Plans may also allow after-tax contributions above this amount.
Income Limits for Roth IRA Contributions3
| Filing Status | Eligibility |
|---|---|
| Single or Head of Household | Phased out: $138,000–$153,0005 ($129,000–$144,000 for 2022) |
| Married Filing Jointly or Qualifying Widow(er)4 | Phased out: $218,000–$228,0005 ($204,000–$214,000 for 2022) |
3There are no income limits for converting Traditional IRA assets to a Roth IRA.
4For married taxpayers filing separately: If you did not live with your spouse at any time during the tax year, see the “single” filing status. Otherwise, your eligibility is phased out between modified adjusted gross income (MAGI) of $0 and $10,000.
5This amount refers to the taxpayer’s MAGI, which does not include amounts that were converted.
Income Limits (MAGI) for Traditional IRA Deductibility6
| Filing Status | Status |
Deductibility |
|---|---|---|
| Single or Head of Household | Not eligible to participate in an employer retirement plan | Full |
| Eligible to participate in an employer retirement plan | Phased out: $73,000–$83,000 ($68,000–$78,000 for 2022) | |
| Married Filing Jointly7 | Neither you nor your spouse is eligible to participate in an employer retirement plan | Full |
| You are not eligible to participate in an employer retirement plan, but your spouse is eligible | Phased out: $218,000–$228,000 ($204,000–$214,000 for 2022) | |
| You are eligible to participate in an employer retirement plan | Phased out: $116,000–$136,000 ($109,000–$129,000 for 2022) |
6There are no income limits for contributing to a Traditional IRA—the limits only apply to determining whether that contribution is deductible.
7Consult IRS rules or a tax professional if your status is married filing separately or qualifying widow(er).
High-Deductible Health Plans (HDHPs)/Health Savings Accounts (HSAs)
| HSA Contribution Limits | Minimum Deductibles | Out-of-Pocket Maximums | |
|---|---|---|---|
| Individuals With Self-Only HDHP Coverage | $3,850 | $1,500 | $7,500 |
| Individuals With Family HDHP Coverage | $7,750 | $3,000 | $15,000 |
| Annual Gift Exclusion | Lifetime Gift and Estate Exclusion | 529 Five-Year Forward Averaging |
|---|---|---|
| Each individual can gift $17,000 this year ($16,000 for 2022) per recipient without gift tax. | Federal estate tax rate maximum is 40%. Gifts over the annual gift tax exclusion amount are counted against the $12,920,0008 $12,060,000 for 2022) unified lifetime gift and estate tax exclusion amount. State estate tax rates and structures may vary. |
Each individual can contribute up to $85,000 (i.e., $17,000 annual gift tax exclusion amount times five) per beneficiary and “average” it for gift tax exclusion over five years, making no additional gifts to that beneficiary during that time. |
8Unused portions of predeceasing spouse’s exclusion amount may be used by surviving spouse.
Income Tax Rates
| Marginal Tax Rate9 (aka Tax Bracket) |
Taxable Income ($)10,11 | |
|---|---|---|
| Single | Married Filing Jointly and Qualifying Widow(er)s |
|
| 10% | $0–$10,999 | $0–$21,999 |
| 12% |
$11,000–$44,724 | $22,000–$89,449 |
| 22% | $44,725–$95,374 | $89,450–$190,749 |
| 24% | $95,375–$182,099 | $190,750–$364,199 |
| 32% | $182,100-$231,249 | $364,200–$462,499 |
| 35% | $231,250–$578,125 | $462,500–$693,750 |
| 37% | Over $578,125 | Over $693,750 |
9Certain individuals may also be subject to a 3.8% net investment income tax and a 0.9% additional Medicare tax.
10Generally, adjusted gross income minus deductions. Standard deduction amounts are $13,850 (single filers) and $27,700 (joint filers).
11Long-term capital gains/qualified dividends rate: A 0% rate applies to taxpayers with taxable income not over $44,625 (single filers) and $89,250 (joint filers). A 15% rate applies to taxpayers with taxable income not over $492,300 (single filers) and $553,850 (joint filers). A 20% rate applies to taxpayers with taxable income above those levels. Gains on assets held for more than 1 year realized by owner sale. Assets held for 1 year or less are short-term gains subject to ordinary income tax.
Social Security
Full Retirement Age (FRA)12 by Year Born
| If you were born in: | Then your FRA is: |
|---|---|
| 1943 through 1954 | Your 66th birthday |
| 1955 through 1959 | Between your 66th and 67th birthdays |
| 1960 or later | Your 67th birthday |
Annual Retirement Benefit Amounts13
| Age-initiating benefits | Maximum |
|---|---|
| 62 and 1 month (smallest benefit possible) | $30,864 |
| 67 (FRA if born in 1960 or later) | $45,696 |
| 70 (largest benefit possible) | $54,660 |
Retirement Earnings Test
| Timing |
Limit |
|---|---|
| Before the year you reach FRA | $1 of benefits is withheld temporarily14 or every $2 earned above $21,240 |
| In the year you reach FRA, but before the month you reach FRA | $1 of benefits is withheld temporarily14 or every $3 earned above $56,520 |
| In the month you reach FRA and later | No limit |
12Someone initiating retirement benefits at full retirement age receives a 100% benefit, called the primary insurance amount (PIA). A person born in 1961 initiating benefits in 2023 at age 62 and 1 month would receive roughly 70% of PIA, whereas someone born in 1953 initiating benefits in 2023 at age 70 would receive 132% of PIA (adjusted for inflation).
13Calculated based on https://www.ssa.gov/oact/cola/examplemax.html, assuming retirement in January 2023. Note: The average annual benefit for all retired workers (not just those of certain ages or initiation dates) is $20,118 (based on the SSA Oct. 2022 Monthly Statistical Snapshot).
14Benefits are recalculated at FRA—to account for amounts withheld—and increased thereafter.
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Important Information
This material is provided for general and educational purposes only and not intended to provide legal, tax, or investment advice. This material does not provide recommendations concerning investments, investment strategies, or account types; it is not individualized to the needs of any specific investor and not intended to suggest any particular investment action is appropriate for you, nor is it intended to serve as the primary basis for investment decision-making. Any tax-related discussion contained in this material, including any attachments/links, is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding any tax penalties or (ii) promoting, marketing, or recommending to any other party any transaction or matter addressed herein. Please consult your independent legal counsel and/or tax professional regarding any legal or tax issues raised in this material.
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