Richard Rubin

speaker

1,496 appearances 29 recordings 1 series first heard Oct 2017 last heard Jan 2024

Richard Rubin’s voice in public audio — every appearance, attributed to the second.

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WSJ Your Money Briefing · How High Inflation Could Boost Your Paycheck · 20 Oct 2022 podcast

Inflation has been high relative to history, and so the idea is to not have people have their taxes go up solely because of inflation.

Well, that was by design by Congress.

They wanted to prevent inflation from causing automatic tax increases.

And so a lot of the key features in the tax code, the tax brackets, the standard deduction are tied to inflation.

So every year the IRS, by law, looks at what inflation has been and then adjusts those provisions accordingly.

In most years, especially most recent years where inflation has been relatively low, it's a few hundred dollars here, a few thousand there.

It's not really a big jump, a couple percentage points.

This year, there are some meaningful adjustments, and that's because of the inflation we've seen in the economy.

Yeah, I don't have any great figures on how much, but it would show up in take-home pay in January.

So in January, these changes all go into effect for tax year 2023.

And so in January...

That's when the withholding tables change and paycheck withholding will adjust somewhat for this 7% increase in the standard deduction and where the brackets are.

And thus, there'll be a corresponding change in how much taxes are taken out.

So all else equal, your taxes would go down coming out of that paycheck.

Now, it obviously will depend whether you're also getting a raise at that time too.

And so...

It's not a guarantee that your take-home pay will necessarily go up, but there will be an adjusted tax bite coming out of it.

These changes are for tax year 2023, which is the returns that people will file in early 2024.

So if you're paying estimated taxes over the course of 2023, every quarter, you'll have to pay attention to them then.

But for a lot of wage earners in particular, you have this year's numbers, 2022 returns will be filed in early 2023.

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