2023 Tax and Retirement Planning Updates to Keep on Your Radar

2023 Tax and Retirement Planning Updates to Keep on Your Radar

January 31, 2023

It is the start of a new year and if you are one for making resolutions, now is a great time to add some financial planning resolutions to your list. Or, at a minimum, keeping tabs on some of the recent updates to tax and retirement limits will make sure you start the year off on a great financial footing.

Tax, Retirement & Gift Planning Updates

  • The federal lifetime exclusion amount has increased to $12.92 million per person, or $25.84 million per married couple. As a reminder, per the Tax Cuts and Jobs Act (TCJA) of 2017, the exclusion amount reverts to pre-Act limits at the end of 2025, adjusted for inflation—unless there is action taken before then to extend the current exclusion amounts.
  • The federal annual gift exclusion is now $17,000 per person, up from $16,000 in 2022.
  • 2023 retirement plan contributions for 401(k)s, 403(b)s, and most 457 plans have increased to $22,500 with an additional catch-up contribution limit of $7,500 for participants aged 50 and older. This means you can put away as much as $30,000 per year in your retirement plan if you are 50+.
  • IRA contribution limits have increased to $6,500 (up from $6,000 in 2022), plus another $1,000 for individuals aged 50 and older.
  • Social Security payments will increase by 8.7% this year.  
  • For Federal income tax brackets in 2023, the top marginal tax rate of 37% now applies to individual income above $578,125 and couples that are married filing jointly with income above $693,750. This is a 7% increase in income thresholds from 2022.
  • The standard deduction has increased to $27,700 for married couples filing jointly and $13,850 for individuals.
  • The maximum contribution to a Flexible Spending Account is now $3,050, up from $2,850 in 2022.
  • If you are enrolled in a Health Savings Account, you can now contribute up to $3,850 for individuals, or $7,750 per family, plus an additional $1,000 catch-up if you are age 55 or older.

Reviewing Your Plans

If you have not completed an estate plan review in the past few years, it may be time to reach out to your estate planning attorney and schedule a meeting to review your documents. The best plans are created with the best intentions; however, if time passes and your personal preferences or tax and estate laws have changed since the drafting of your documents, then your original plan may be in need of a refresh. Many parameters of the TCJA are scheduled to revert to pre-Act levels at the end of 2025, and while that seems a long time away, it will be here before you know it. And the closer we get to the deadline, the busier your attorney’s calendar is likely to get—so make the call now. 

Regarding your personal financial plan, the market volatility we experienced in 2022 suggests it may be the perfect time to review your long-term retirement plans to determine if they are on still on course or if they are also in need of some adjustments. During meetings with your Sand Hill Wealth Manager this year, we will be discussing your personal situation in detail. We look forward to meeting with you soon!


Sources: Internal Revenue Service, Social Security Administration

Articles and Commentary

Information provided in written articles are for informational purposes only and should not be considered investment advice. There is a risk of loss from investments in securities, including the risk of loss of principal. The information contained herein reflects Sand Hill Global Advisors' (“SHGA”) views as of the date of publication. Such views are subject to change at any time without notice due to changes in market or economic conditions and may not necessarily come to pass. SHGA does not provide tax or legal advice. To the extent that any material herein concerns tax or legal matters, such information is not intended to be solely relied upon nor used for the purpose of making tax and/or legal decisions without first seeking independent advice from a tax and/or legal professional. SHGA has obtained the information provided herein from various third party sources believed to be reliable but such information is not guaranteed. Certain links in this site connect to other websites maintained by third parties over whom SHGA has no control. SHGA makes no representations as to the accuracy or any other aspect of information contained in other Web Sites. Any forward looking statements or forecasts are based on assumptions and actual results are expected to vary from any such statements or forecasts. No reliance should be placed on any such statements or forecasts when making any investment decision. SHGA is not responsible for the consequences of any decisions or actions taken as a result of information provided in this presentation and does not warrant or guarantee the accuracy or completeness of this information. No part of this material may be (i) copied, photocopied, or duplicated in any form, by any means, or (ii) redistributed without the prior written consent of SHGA.


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