Posted on 10/23/22
| News Source: Pikesville Patch
Inflation that has reduced Maryland residents’ purchasing power will also allow many of them to reduce their 2023 federal tax bills, the IRS said Tuesday.
The IRS said it is adjusting rules in about 60 provisions, from individual tax brackets to the standard deduction, to ease the pain of the rising inflation rate, which stood at 8.2 percent in September.
The IRS adjusts its rates annually to account for Consumer Price Index changes, but this year’s hot inflation would have pushed many Americans into higher tax brackets, even though their standard of living hadn’t changed.
The shift in tax rates would have been higher if not for a provision in the Trump administration’s 2017 tax overhaul that tied the tax rate to increases in the chain-weighted Consumer Price Index, based on the products consumers actually buy, rather than the standard Consumer Price Index, The New York Times reported.
The chained CPI increases at a slower rate, and was up by a quarter of a percentage point less than the standard CPI in September, according to the Times.