Due to high inflation, many of the tax related limits that impact business that are evaluated annually have had a more significant increase for 2023.
Here are some examples that may affect your business.
Social Security tax
The amount of employees’ earnings that are subject to Social Security tax is capped for 2023 at $160,200 (up from $147,000 for 2022).
Section 179 expensing:
- Limit: $1.16 million (up from $1.08 million)
- Phaseout: $2.89 million (up from $2.7 million)
Income-based phase-out for certain limits on the Sec. 199A qualified business income deduction begins at:
- Married filing jointly: $364,200 (up from $340,100)
- Other filers: $182,100 (up from $170,050)
- Employee contributions to 401(k) plans: $22,500 (up from $20,500)
- Catch-up contributions to 401(k) plans: $7,500 (up from $6,500)
- Employee contributions to SIMPLEs: $15,500 (up from $14,000)
- Catch-up contributions to SIMPLEs: $3,500 (up from $3,000)
- Combined employer/employee contributions to defined contribution plans (not including catch-ups): $66,000 (up from $61,000)
- Maximum compensation used to determine contributions: $330,000 (up from $305,000)
- Annual benefit for defined benefit plans: $265,000 (up from $245,000)
- Compensation defining a highly compensated employee: $150,000 (up from $135,000)
- Compensation defining a “key” employee: $215,000 (up from $200,000)
Other employee benefits
Qualified transportation fringe-benefits employee income exclusion: $300 per month (up from $280)
Health Savings Account contributions:
- Individual coverage: $3,850 (up from $3,650)
- Family coverage: $7,750 (up from $7,300)
- Catch-up contribution: $1,000 (no change)
Flexible Spending Account contributions:
- Health care: $3,050 (up from $2,850)
- Dependent care: $5,000 (no change)
These are only some of the tax limits and deductions that may affect your business and additional rules may apply. Contact your Rudler, PSC advisor if you have questions at 859-331-1717.
RUDLER, PSC CPAs and Business Advisors
This week's Rudler Review is presented by Erin Mauch, Staff Accountant and Karen Daugherty, CPA.
If you would like to discuss your particular situation, contact Erin or Karen at 859-331-1717.
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