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New tax laws for 2023: What to know to maximize your 2023 tax return

5 min read

5 min read

November 30, 2023

H&R Block

Tax rules can change each year, making it tough to keep up. So, how do you find out about key new tax laws for 2023 (for taxes filed in 2024)?  Easy – just turn to H&R Block. The best part is that you don’t have to dig for details about what affects your 2023 taxes.

new tax laws 2023

Block has got you covered with an outline of the new tax breaks that can help you get back the most money possible this tax season. Check out the need-to-know 2023 new tax laws and related changes below.

2023 taxes and new rules

Don’t worry — you won’t need to have a tax law degree to follow what changes could affect you this tax year. Instead, check out the situations below and see what’s relevant to your life.

In 2023, did you…?

  • Restart or make student loan payments? After a repayment freeze due to the pandemic, borrowers were required to make student loan payments again starting in the fall of 2023. If this includes you, the silver lining is that you may be able to receive a student loan interest deduction based on any interest payments you’ve made. 
  • Buy healthcare coverage from the ACA marketplace (heathcare.gov)?  A temporary rule change lets more people take the Premium Tax Credit (PTC) and receive a larger credit when they do. The law expands eligibility to those with a household income above 400% of the federal poverty level. Taxpayers who are eligible can receive larger credits due to the lower premiums that households must contribute (now between 0-8.5% of their income).
  • Make energy efficient home improvements? The value of two “green” credits has expanded starting with 2023 taxes.
    • Energy Efficient Home Improvement Credit (EEHIC). If you installed qualifying exterior windows/doors, skylights, insulation materials and more, or purchased a new furnace, hot water heater, or central air conditioner you may be eligible for this tax break. The credit limit is up to $1,200 per taxpayer per year with a $600 per item cap on most types of property. And, there’s a higher credit limit of up to $2,000 for a separate category of heat pumps, heat pump water heaters, and biomass fuel stoves.
    • Residential Clean Energy (RCE) Credit – If you installed equipment such as solar panels or solar water heaters, you could get a credit valued at 30% of your qualifying expenditures.
  • Purchase an electric vehicle? Starting in 2023, if you purchased a used electric vehicle, you can get a credit of up to $4,000 (or 30% of the purchase price). Bought a new car? That credit is now worth up to $7,500. For both credits, you could claim the tax breaks if you purchased qualified vehicles and your income does not exceed a certain threshold.
  • Take a retirement plan distribution to cover disaster expenses? For those in federally declared major disaster areas, a new tax law for 2023 lets you take up to $22,000 from certain retirement plans without a 10% early distribution penalty. Additionally, you’ll have three years to pay the tax on how much you take out.
  • Receive a state tax rebate or relief payment? If you received a rebate or relief payment from your state, this money is often not considered income on a federal tax level.

Get help navigating 2023 taxes. Get your maximum refund.

Other tax changes for 2023

The Internal Revenue Service (IRS) makes updates to common tax provisions, such as the standard deduction, each year to ensure that certain parts of the tax code keep up with inflation. Aside from new laws, there are other adjustments and tax news to be aware of as you consider your taxes this season.

Inflation updates – Tax brackets and other amounts are typically adjusted each year for inflation. The 2023 tax table changes made headlines last year as, at 7%,  the tax brackets and corresponding income tax rates for 2023 were much higher than previous years.

So, what does that mean for you? It can get complicated as there are many factors that determine how much tax you pay. But, in general, if your wages stayed the same for 2023, or if you had a pay increase that was lower than the 7% inflation increase, you may end up paying less in tax overall. Essentially, these adjustments help prevent you from experiencing “bracket creep” as incomes shift up with overall inflation.

Related to these changes are updates to the standard deduction amounts. The IRS allows most taxpayers to lower their taxable income by taking either the standard deduction or by itemizing deductions. Check out the latest standard deduction amounts for those filing as Single, Married Filing Jointly, or other statuses.

IRS re-starting collections – As part of its pandemic relief program, the Internal Revenue Service paused on sending taxpayers notices for unpaid tax bills. Starting in the fall of 2023, the IRS is sending these notices for tax year 2022. So, for example, if you still owe taxes for 2022, you may receive a letter from the IRS requesting payment.

Getting your maximum tax refund, even if new tax laws don’t apply to you

Did you answer “no” to the questions above? Fear not! You may still be able to lower your tax bill with other tax credits and tax deductions for 2023 with the expertise of H&R Block on your side.

Whether you file taxes online or with an H&R Block tax pro, we’ll help you uncover every last credit and deduction you deserve.

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