2023 Tax Table
2023 Tax Rate | Single | Married Filing Joint |
10% | $0 to $11,000 | $0 to $22,000 |
12% | $11,000 to $44,725 | $22,000 to $89,450 |
22% | $44,725 to $95,375 | $89,450 to $190,750 |
24% | $95,375 to $182,100 | $190,750 to $364,200 |
32% | $182,100 to $231,250 | $364,200 to $462,500 |
35% | $231,250 to $578,125 | $462,500 to $693,750 |
37% | $578,125 or more | $693,75 or more |
Source: IRS
2023 Standard Deduction
Filing Status | Deduction Amount |
Single | $13,850 |
Married Filing Joint | $27,700 |
Keep in mind that if and when you withdraw that money from the IRA, the withdrawn amount is 100% subject to income tax at whatever the prevailing income tax rates are at that time.
As for when to take money out of your IRA if you’re looking to protect it using the Living Trust Plus®, please keep in mind that as a result of the Tax Cuts and Jobs Act (TCJA) that was signed into law on Dec. 22, 2017, the top income tax rate fell from 39.6% to 37%, while the 33% bracket dropped to 32%, the 28% bracket to 24%, the 25% bracket to 22%, and the 15% bracket to 12%. The lowest bracket remained at 10%, and the 35% bracket was also unchanged. However, these changes are temporary, set to sunset at the end of 2025.
Tax Bracket Management Strategies
For people already in the 22% tax bracket, all income withdrawn from a qualified retirement account such as an IRA or 401(k) will be taxed at a minimum rate of 22%. Optimal tax bracket management might involve withdrawing funds from your qualified retirement account(s), potentially over several years, in order to bring your income to the top of the 24% tax bracket, thus locking in the low 24% tax rate. The money withdrawn could then be used to fund a Roth IRA (there are no limits on these types of “back-door” Roth contributions) or, often better for our Level 3 clients, to put this money into the Living Trust Plus® Asset Protection Trust.
Tax bracket management strategies discussed above are not financial advice and are not intended to be used as the sole basis for financial decisions. Financial advice and specific strategies must be designed to meet the particular needs of your specific situation. Numerous factors should always be considered, in consultation with your attorney, your financial advisor, and your CPA, and tailored to your specific goals and the relative weight or value you assign to each specific goal. There is often no single “best” solution that will achieve all of your goals. For example, the goals of most people are to (1) protect your assets from lawsuits and nursing home expenses, (2) pay as little as possible in taxes, (3) pay as little as possible in legal fees and accounting fees, and (4) pay as little as possible for your Medicare premiums. All of these are valid and important goals, but all of these goals cannot be maximized at the same time because, for example, protecting your assets involves paying attorneys fees (e.g. to prepare an Asset Protection Trust) and additional accounting fees (e.g. to file an additional tax return each year) and may involve paying more in taxes if you cash out a retirement account to put after-tax money into a trust and gain the peace of mind of asset protection (how do you value “peace of mind” — no easy answer — Google the phrase how to value “peace of mind” and you’ll see there is no answer), and increasing your taxes may also increase your Medicare premium two years later due to IRMAA (more on this below). Therefore, no single goal can drive your decisions. For example, paying attorneys fees to prepare an Asset Protection Trust, which also requires the filing of an extra annual tax return, may seem expensive at first. However, you have to weigh that cost against the asset protection and peace of mind that you’re achieving, such as protecting your assets from the expense and nightmare of probate and the potentially catastrophic exposure to lawsuits and nursing home expenses. Similarly, taking withdrawals from your IRA to put the after-tax funds into an asset protection trust requires paying taxes now that you could defer and pay later (or force your kids to pay later, quite possibly at higher tax rates), but this might make sense if you put greater weight on your asset protection goals than your short-term tax goals. Paying modest legal and accounting fees that go along with asset protection typically provides tremendous peace of mind in addition to actual protection in the event you are sued or wind up needing nursing home care. Each person must focus on the whole picture and all of their goals in order to decide which strategy or combination of strategies best serves their purposes.
Expected Increase in Tax Rates in 2026
2016 Tax Rates | Current Tax Rates | 2026 Tax Rates |
10% | 10% | 10% |
15% | 12% | 15% |
25% | 22% | 25% |
28% | 24% | 28% |
33% | 32% | 33% |
39.6% | 37% | 39.6% |
IRMAA (Income Related Monthly Adjustment Amount) for Medicare
Medicare Part B Premiums by Income – 2023
The standard Part B premium amount is shown below. If your modified adjusted gross income, as reported on your IRS tax return from 2 years ago, is above the threshold, then the IRMAA (Income Related Monthly Adjustment Amount) assessment increases the Part B and Part D premiums to the amounts shown in the tables below:
| What You Pay in 2023 (Based on Your Yearly Income in 2021) | You pay each month (in 2023) | ||
|---|---|---|---|
| File individual tax return | File joint tax return | File married & separate tax return | |
| $97,000 or less | $194,000 or less | $97,000 or less | $164.90 |
| above $97,000 up to $123,000 | above $194,000 up to $246,000 | Not applicable | $230.80 |
| above$123,000 up to $153,000 | above $246,000 up to $306,000 | Not applicable | $329.70 |
| above $153,000 up to $183,000 | above $306,000 up to $366,000 | Not applicable | $428.60 |
| above $183,000 and less than $500,000 | above $366,000 and less than $750,000 | above $97,000 and less than $403,000 | $527.50 |
| $500,000 or above | $750,000 or above | $403,000 or above | $560.50 |
Source: CMS
Medicare Part D Premiums by Income – 2023
The chart below shows your estimated prescription drug plan monthly premium based on your income as reported on your IRS tax return. If your income is above a certain limit, you’ll pay an income-related monthly adjustment amount in addition to your plan premium.
| What You Pay in 2023 (Based on Your Yearly Income in 2021) | |||
| File individual tax return | File joint tax return | File married & separate tax return | You pay each month (in 2022) |
|---|---|---|---|
| $97,000 or less | $194,000 or less | $97,000 or less | your plan premium |
| above $97,000 up to $123,000 | above $194,000 up to $246,000 | not applicable | $12.20 + your plan premium |
| above $123,000 up to $153,000 | above $246,000 up to $306,000 | not applicable | $31.5 + your plan premium |
| above $153,000 up to $183,000 | above $306,000 up to $366,000 | not applicable | $50.70 + your plan premium |
| above $183,000 and less than $500,000 | above $366,000 and less than $750,000 | above $97,000 and less than $403,000 | $70.00 + your plan premium |
| $500,000 or above | $750,000 or above | $403,000 or above | $76.40 + your plan premium |
Source: CMS
The financial strategy examples above are not financial advice and are not intended to be used as the sole basis for financial decisions. Financial advice and specific strategies must be designed to meet the particular needs of your specific situation.
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