A few weeks ago, the Internal Revenue Service announced measures to support the purchasing power of Americans in the 2023. This direction comes in the middle of an inflationary context. The U.S. government announced that the consumer price index, which measures a basket of everyday consumer goods, rose by 8.2% in September, much faster than expected.
This tax reform consists mainly of an increase in the tax brackets and the deductions that can be made from federal taxable income.
This law is mainly guided by the desire to avoid a phenomenon that would lead taxpayers to see their salaries increase, particularly as a result of salary negotiations, without seeing their purchasing power increase at the same rate. This would happen mechanically if the tax brackets remained unchanged. The wage gain would then be largely cancelled out by reaching a higher tax bracket than before.
This year, the tax brackets will have been increased by 7%. This should support a purchasing power that has been suffering for several months. The changes made by the IRS in 2022 will be applicable to the 2023 tax year and therefore to the tax returns made in 2024.
Despite all these changes, the rate applicable to the highest tax bracket remains 37%. This is in keeping with a desire to support moderate incomes rather than the wealthiest.
ORCOM will be your partner to accompany you in your declarative strategy on the other side of the Atlantic in order to get the most out of this type of reform.
