The IRS adjusted contribution limits for various accounts in 2023 due to inflation and increased cost of living. Therefore, if you contribute to any accounts with the goal of maximizing your contribution, you will want to take note of the following contribution limit increases:
- Health Savings Account (HSA) - $3,850 for self-only coverage and $7,750 for family coverage; individuals age 55 and up can contribute an additional $1,000
- 401(k) / 403(b) Accounts - $22,500; individuals age 50 and up can contribute an additional $7,500
- IRA/Roth IRA - $6,500; individuals age 50 and up can contribute an additional $1,000
- Simple IRA - $15,500; individuals age 50 and up can contribute an additional $3,500
In addition to the contribution limit increases, the IRS increased the income ranges for determining eligibility for deductible traditional IRA contributions and Roth IRA contributions. Remember, traditional IRA contributions are fully deductible regardless of income for single tax filers not covered by an employer-sponsored retirement plan and for married couples where an employer-sponsored retirement plan covers neither spouse.
For single tax filers covered by an employer-sponsored retirement plan, the income phase-out range for deductible traditional IRA contributions begins at $73,000 in annual income. For married couples filing jointly where an employer-sponsored retirement plan covers the IRA contributor, the phase-out range begins at $116,000. For married couples filing jointly where the IRA contributor is not covered by an employer-sponsored retirement plan but is married to someone covered, the phase-out range begins at $218,000.
The income phase-out range for single tax filers for Roth IRA contributions increased to $138,000 in annual income. The phase-out range for married couples filing jointly increased to $218,000 in annual income.
If you’re an Indiana taxpayer and contribute to a CollegeChoice 529 plan – you’re in luck! The maximum state tax credit has increased in 2023 as well.
- Indiana 529 state tax credit - Contributions by Indiana taxpayers qualify for a 20% tax credit with a new maximum credit of $1,500 for a $7,500 contribution.
If there must be a positive aspect to higher inflation, increased contribution limits and income thresholds for retirement account contributions are just that. So make sure you take advantage of these opportunities to increase your savings in 2023!
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