Note that the Tax Foundation is a 501(c)(3) educational nonprofit and cannot answer specific questions about your tax situation or assist in the tax filing process. The new inflation adjustments are for tax year 2022, for which taxpayers will file tax returns in early 2023. However, with the Tax Cuts and Jobs Act of 2017 (TCJA), the IRS now uses the Chained Consumer Price Index (C-CPI) to adjust income thresholds, deduction amounts, and credit values accordingly. The IRS used to use the Consumer Price Index (CPI) as a measure of inflation prior to 2018. ” Bracket creep occurs when people are pushed into higher income tax brackets or have reduced value from credits and deductions due to inflation, instead of any increase in real income. Many tax provisions-both at the federal and state level-are adjusted for inflation. Bracket creep results in an increase in income taxes without an increase in real income. To prevent what is called “ bracket creep Bracket creep occurs when inflation pushes taxpayers into higher income tax brackets or reduces the value of credits, deductions, and exemptions. It is sometimes referred to as a “ hidden tax,” as it leaves taxpayers less well-off due to higher costs and “ bracket creep,” while increasing the government’s spending power. The same paycheck covers less goods, services, and bills. Provisions for inflation Inflation is when the general price of goods and services increases across the economy, reducing the purchasing power of a currency and the value of certain assets. On a yearly basis the Internal Revenue Service (IRS) adjusts more than 60 tax A tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. See 2024 Tax Brackets See 2023 Tax Brackets

2020 irs income tax tables