Inflation is here. It is at a record high. And it’s not going anywhere anytime soon.
By now, we’ve all seen the effects. Gas prices are higher than ever, groceries are nearly unaffordable, and don’t even get me started on how high rent is at present.
We also all know that behind it all is Democratic President Joe Biden and his administration’s poor handling of our economy.
When he was handed the reigns in early 2021, our nation wasn’t exactly in its prime. We were coming off of a record pandemic that affected just about everything we see and even feel. But we were recovering. Jobs were coming back, the economy was making a comeback, and people were starting to feel like normal was returning.
Then Biden stepped into power. He shut down basically all oil and gas production in the US. He reimplemented mask mandates and forced people to vaccinate or lose their jobs. And then raised taxes.
And our economy has continued to sink deeper into despair every month since then, so much so that experts predict a recession to hit us full force sometime in the next six to nine months.
Of course, Biden and his ilk have made a few moves to supposedly stave off such an occurrence. Namely, they have had the Federal Reserve raise interest rates, which can, in fact, help to lower inflation if done in moderation. The problem is that those same experts are concerned that moderation has been thrown to the wind to overcorrect their past mistakes. And that is likely to send us right for the recession cliff.
There is one bit of good news, though. And surprisingly, it comes from Biden’s newly refunded IRS.
On Tuesday, the Internal Revenue Service announced that it would be making a number of significant changes.
For starters, it would be raising the standard deduction by about 7 percent, per a report from The Hill.
So what does this mean for you? Well, basically, it means that less will be taken out in your income taxes for 2023.
For married couples that file jointly, the standard deduction will now be $27,700, a rise of $1,800. In 2022, that deduction was $25,900.
Individuals filing on their own will see an increase of $900 in 2023, up to $13,850. And for heads of households, the standard deduction will rise by about $1,400 to 20,800 next year.
Additionally, the IRS has provided a slightly new outline for the marginal tax rate bracket.
According to the IRS, the changes are being made as part of their yearly adjustments to tax parameters. Small adjustments are usually made every year, according to formulas set by Congress, to make up for changes seen in our economy, and where that economy is projected to be in the coming year, the Wall Street Journal reports.
This year, with inflation at a 40-year high, the IRS has been forced to make higher than average changes, the largest, in fact, since 1985, which is shortly after when inflation was as high as it is now.
In addition to the changes mentioned above, smaller adjustments, such as an increase in employee contributions to health care flexible spending accounts and an increase to the amount that can be excluded from estate taxes and annual gift taxes, are to be made for the coming year.
Of course, the exclusions for foreign-earned income have also increased.
Basically, it means that the average taxpayer will see more money being left to them on their paycheck and fewer dollars are taken out, which means more money in every American’s pocket overall.
It was also noted on Tuesday that a few other changes would be made in the near future. These are likely to include information on retirement accounts and contributions to 401(k)s. announcements on these will be made in the coming days and weeks, the IRS said.
As I said, it’s all good news and will likely help a good number of struggling Americans through this tough inflationary period. However, as with Biden’s plans to combat inflation in general. It’s all too little, too late, especially considering that the whole situation could have been avoidable.