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The Internal Revenue Service has announced major inflation adjustments for tax brackets — but experts say they still won’t offset all of the pain.
The IRS put out a statement on Tuesday announcing that its tax brackets next year will increase by around 7% as taxpayers grapple with surging prices for everything from gasoline to groceries. That means those whose wages have not kept up with inflation could be eligible to land in lower tax brackets.
The IRS adjusts tax brackets annually using an adjusted version of the US government’s Consumer Price Index. Typically the increase is small, but this time — using the big price jumps logged between September 2021 and August 2022 as inflation hits 40-year highs — the upward revision is far more dramatic.
Still, the 7% figure falls short of the recent monthly surges in the CPI, which was up 8.2% in September. And the lag time for the adjustment — it will become effective only for 2023 which means people won’t reap the benefit of for another 18 months — means tax pain will persist.
“There’s always strong pressure to protect taxpayers from excessive, unfair tax liability,” Alex Durante, an economist at The Tax Foundation, told The Post.
