3 Ways to Save Money on Your 2023 Taxes

New tax brackets, standard deductions, and tax credits are now in effect, meaning more Wisconsinites can save more money on their taxes this year. 

Here are three that will likely save you money…

1. The Income Tax Brackets are Changing.

The percentage you pay in income taxes progressively increases (from 10% to 37%) the more you earn. Thanks to inflation (how often can we say that?), this year’s thresholds have increased– meaning you have to make even more money to hit a higher tax rate.

For example, in 2023, an unmarried filer who makes $95,000/year will have a top rate of 22%, down from 24% last year. That shakes out to a total savings of $429!

Click here for a full tax bracket breakdown, for both single and joint filers.

2. The Standard Deduction is Increasing.

All filers can choose to take a standard deduction or itemize deductions to reduce the amount of their income that’s taxable for the year. Most claim the standard deduction because it’s easier and doesn’t require tallying up charitable donations, major medical bills, and state and local taxes.

Like income tax brackets, the standard deduction gets an annual inflation adjustment. This year’s bump is one of the biggest yet! In 2023, it’s increasing by $900, to $13,850 for singles, and by $1,800, to $27,700, for couples.

3. There are New Credits to Capitalize On!

On January 1st, Wisconsinites became eligible to save thousands of dollars in taxes when they buy electric cars, induction stoves, and other modern appliances  under the Inflation Reduction Act that Democrats passed last fall.

If you’ve added a heat pump, upgraded your breaker box, weatherized your insulation, installed a solar rooftop, or purchased an electric vehicle, you are eligible for a new tax credit of about 30%.

Click here for the specifics.

One of the best ways anyone can save money on taxes is by not spending it on filing them.

• If you make less than $73,000/year, you qualify for the IRS Free File program, which provides free access to guided tax prep software from major brands like TaxSlayer. 
• If you make less than $60,000, are older, live with a disability, or speak limited English, you qualify for Volunteer Income Tax Assistance (VITA), which provides free tax prep from local, IRS-certified volunteers.
• Many local libraries, community centers, and local colleges offer free tax assistance to anyone through pop-up clinics.

Click here to answer a few questions and find out which FREE programs are available to you!

The UpLift

This time of year, local Wisconsin Facebook groups are filling up with posts about taxes, and people are quickly jumping in with helpful advice.

One poster, a tax accountant, shared five things everyone should know, “not only because ‘this is my specialty,’ but because I enjoy educating people about taxes,” she wrote.

1. Wait for all of your paperwork to arrive by mail, email, downloaded pdf, etc.

2. If you’re using a free tax service [more on this below], ask questions like, “Why this amount?”, so you understand what’s being reported. If you’re paying for services, this should be summarized for you, too! 

3. Remember to always get a copy of your return. 

4. Don’t forget to claim all of your children. While only three qualify for the Earned Income Credit, there is no maximum on the Child Tax Credit. 

5. Always file, even if you don’t think you’ll get a refund. The IRS is still holding onto $1.5 billion from people who never filed their 2018 taxes, and the average Wisconsin family is entitled to $755!

Click here to find and join a “Neighbors Helping Neighbors” group near you!