Thanks to inflation, it feels like everything is more expensive these days no matter what you're buying or where you shop. In addition to high prices of goods and food, interest rates have also been impacted by rising interest rates. Most Americans are looking for ways to reduce expenses and make their money go further. The 12-month inflation rate in November was 7.1%, which was a near four-decade high. Experts and analysts are hopeful that inflation has peaked. Even so, many prices continue to rise and consumers are feeling the pinch. Thankfully, now that we are in 2023, we are due to see some positive changes, including adjustments for Social Security, minimum wage, and more to help Americans.
Beneficiaries saw a cost of living increase of 8.7% in January.
This is the largest increase seen in a generation.
There is also an unusual, one-time decrease in Medicare premiums.
Income Tax Brackets
IRS tax brackets are shifting upward by 7%.
The standard deduction is also increasing by $900 for individuals, $1800 for married couples filing jointly, or $1400 for head-of-household filers.
401(k) Pre-tax Contribution Limits
The IRS has increased the amount of money individuals or employers can contribute to retirement plans.
Individual employees can contribute up to $22,500 to their 401(k) retirement accounts in 2023, up $2000 from 2022.
Combined employer and employee contributions have increased to a total annual limit of $66,000 in 2023, which is an increase of $5000 from 2022.
Yields on Savings, CD Accounts, and I-Bonds
Many banks, particularly those that are online-only, have increased the amount of interest they are paying significantly.
Increases may not come automatically - you may need to speak with your bank to make sure your money is in the appropriate accounts for maximizing interest earnings.
Some states and large cities are increasing minimum wage to account for the annual cost of living adjustment.