The new tax rules for 2023 are all over the place and include:
- Personal Standard Deduction
- Bonus depreciation
- Energy Efficient Home Improvement Credit
- Excess Business Loss Limitation
Personal Standard Deduction
Personal Standard Deduction for 2023 increases due to inflation:
- Single $13,850
- Married, filing jointly $27,700
- Married, filing separately $13,850
- Head of household $20,800
Energy Efficient Home Improvement Credit
Energy Efficient Home Improvement Credit – Expanded credit beginning in 2023:
- Credit increased from 10% to 30%
- No longer required for primary residence.
- $500 lifetime limit will be replaced by a $1,200 annual limit on the credit amount. Annual credit limit of $1,200 per taxpayer, per year with limitations by property type
- After 2024, product must have an assigned identification number and the taxpayer.
- claiming the credit includes the number on their 1040.
- The revised credit is extended through 2032.
Business Loss Limitation
Excess Business Loss Limitation – Extended by law through 2028
- 2023: Single $289,000; Married, filing jointly $578,000
- Excess Amounts convert to net operating loss carryover (NOL)
- NOL Carries forward indefinitely
- May offset up 80% of taxable income
Bonus Depreciation
Bonus depreciation on certain fixed assets purchased for a business is now on a 5-year phase-out starting 1/1/2023
- 2023 80%
- 2024 60%
- 2025 40%
- 2026 20%
- 2027 0%
For a “C” Corporation business, charitable contributions are limited to 10% taxable income limitation (from 25% in 2021).
Business Meals – 2022 was last year for 100% deductibility (back to 50% in 2023).
The “small business” exception for various favorable tax rules such as interest expense limitation exemption, cash method of accounting, 263A reseller exemption = $27 million average receipts (up from $26 million).
IRS business mileage rate increases from 62.5 cents (2022) to 65.5 cents (2023) per mile driven.
On certain fixed assets purchased for a business, the Section 179 expense property Limit is increased to $1,080,000.
If you have questions about your 2023 deductions, credits, or depreciation, give me a call.