Charitable Giving and Taxes: What You Need to Know in 2023

A new year comes with change, including updates from the IRS to the standard deduction and charitable contribution limits. These changes are a not-so-subtle reminder from the IRS of how important it is to incorporate a charitable giving strategy into any wealth or tax planning for the year. Depending on what 2023 will look like for you, there may be ways to make an extraordinary impact on the causes you care about while potentially lessening your taxable liability.

Below are the most notable IRS changes to the standard deduction, estate tax, and more from 2022 to 2023.

2023 Standard Deductions

The standard deduction for married couples filing jointly for tax year 2023 rises to $27,700, up from $25,900 the prior year.

For single taxpayers and married individuals filing separately, the standard deduction rises to $13,850 for 2023, up from $12,950 the prior year.

And for heads of household, the standard deduction will be $20,800 for tax year 2023, up from $19,400 for tax year 2022.

Marginal Tax Rates

For tax year 2023, the top tax rate remains 37% for individual single taxpayers with incomes greater than $578,125 (or $693,750 for married couples filing jointly). This income threshold is adjusted from $539,900 (or $647,850 for married couples filing jointly) in tax year 2022.

Alternative Minimum Tax

The alternative minimum tax (AMT) exemption amount for 2023 is $81,300 and begins to phase out at $578,150 ($126,500 for married couples filing jointly, for whom the exemption begins to phase out at $1,156,300). The 2022 exemption amount was $75,900 and began to phase out at $539,900 ($118,100 for married couples filing jointly for whom the exemption began to phase out at $1,079,800).

Estate Tax

Estates of decedents who pass away during 2023 have a basic exclusion amount of $12,920,000, up from a total of $12,060,000 for estates of decedents who passed away in 2022.

Gift Exclusion

The annual exclusion for gifts increases to $17,000 for calendar year 2023, up from $16,000 for calendar year 2022. The charitable contribution limit for a gift of cash to a public charity or donor advised fund remains 60% of one’s adjusted gross income (AGI), and the limit for non-cash gifts remains 30% of AGI.

From gifts of cash, non-cash items such as business interests, real estate, publicly-traded securities, or alternative investments, our team can help incorporate gifting into your plans or advising practice. If there is a specific situation where we can add value, please contact us to talk more about the best strategies for your goals.

Praying for an incredible year of advancing God’s Kingdom.