Signed into law on December 2022, is a continuation of the Setting Every Community Up for Retirement Enhancement Act of 2019. The new law is designed to help taxpayers save more money for retirement
Almost all the new laws take effect in years following 2023, but there are a couple of new laws that effect taxpayers for 2023. These are as follows:
A. Increase in Age for Required Minimum Distributions from qualified retirement plans and IRAs by April 1st of the calendar year following the calendar year in which taxpayer reaches the required age. Currently the age is 72 years old. The new law replaces the age 72 threshold with the following age thresholds:
1) Age 73 starting in 2023
2) Age 75 starting in 2033
B. Increase IRA's Catch-up Limits. The inflation adjusted IRA contribution amount for 2023 is $6,500 for an individual up to age 50 and $7,500 for an individual 50 years and older. Each year the regular contribution amount is indexed for inflation. However, the $1,000 catch-up amount is not indexed for inflation, which has been $1,000 since 2006. Under this new law, beginning with the 2024 calendar year, the $1,000 catch-up amount will be indexed for inflation.
You will hear more about the 31 pages of new laws in the corning years that will help taxpayers save more retirement money through their employers and their own IRAs.
C. Clean Vehicle Tax Credits. The Inflation Reduction Act of2022 makes several changes to the tax credits for New Clean Vehicle Tax Credits and USED Clean Vehicle Tax Credits. If your qualified plug-in electric drive motor vehicle, including adding fuel cell vehicles meet certain qualifications there are federal tax credits available. Effective January 1, 2023, New clean vehicles maybe eligible for a $7,500 tax credit and Used clean vehicles maybe eligible for a $4,000 tax credit. These tax credits are Non-refundable and cannot be carried forward to future tax years. There are many requirements that taxpayers have to meet in order to claim these credits, including income limits.
D. IRS FREE Direct Payment of Federal estimated taxes, Federal taxes due, and payment for prior tax years taxes , and audit adjustment taxes due. The IRS now offers totally free on-line direct payments at www.irs.gov/directpay. Wisconsin Department of Revenue offers On-Line Direct Pay, but they charge for this service. Go to www.revenue.wi.gov