Inflation and Taxes: A Married Couple's Taxes Stay the Same?
The IRS’ inflation adjustments for 2023 would help a married couple pay the same effective tax rate as in 2022 even though their income increased.


As inflation takes a toll on us all, the IRS avoids being part of the problem by adjusting the tax code. Let’s look at how inflation would affect a married couple’s taxes and how the 2023 tax code changes would keep that couple’s tax rate from rising. (You can read about the specifics of the IRS changes in the article How Inflation Can Impact Your Taxes.)
Inflation has been the highest in about 40 years. That means that if your income or investments goes up at the same rate or less as prices, you can’t buy any more stuff than you could before, even though your income and assets may have increased in dollars. This higher inflation has resulted in the IRS making adjustments in the tax code that are more significant than in prior years. For 2023, the IRS has applied approximately a 7% increase to the 2022 income tax brackets. Without adjustment for inflation, a higher income would produce a higher average income tax rate, as more income would be taxed at higher rates.
Many people think they pay tax on all income at their highest rate or the bracket they are in, but that is not true. It is important to understand the difference between marginal rate (tax bracket) and effective rate (average rate).
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.

Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Let’s look at examples to understand both the difference between marginal and effective rates and the impacts of inflation adjustments:
- Assume a married couple filing a joint return earns $200,000 in 2022.
- The couple receives cost-of-living adjustments of 7% and earns $214,000 in 2023.
- They use the standard deduction of $25,900 in 2022 and $27,700 in 2023.
Figuring the Marginal vs. Effective Rate
In 2022, with income of $200,000 and taking a standard deduction of $25,900, taxable income would be $174,100. This puts them in the 22% bracket, according to the 2022 tax brackets, or a marginal rate of 22%, but they do not pay tax on all their income at that rate. Instead, they pay 10% on the first $20,550, 12% from $20,551 to $83,550 and 22% from $83,551 to $174,100. As you follow the example, you will find that they pay an overall effective rate of 16.96%.
In 2022, our couple with adjusted gross income (before certain deductions) of $200,000 using the standard deduction of $25,900 would have taxable income of $174,100 and would pay federal income tax of $29,536. That equates to an average/effective rate of 16.96% ($29,536 / $174,100).
Without inflation adjustments and $214,000 of income in 2023, the tax would increase to $32,815, an average rate of 17.45%. More tax would be paid on income that was intended to keep up with inflation. Without adjustment, the income would buy no more stuff than the year before!
With inflation adjustments applied to the brackets and a standard deduction that will also increase with inflation to $27,700, if income increased to $214,000 in 2023, taxable income would be $186,300, and the tax would be $31,601, an average rate of 16.96%, the same rate as 2022.
If the same couple had $200,000 of income in both years, the adjustments to the brackets would cause their income to be taxed at lower rates in 2023, and they would save $1,015 in taxes.
Switching Between the Standard Deduction and Itemized Deductions Affects Taxes, Too
The Tax Cuts and Jobs Act of 2017 limited state and local tax deductions to $10,000 and increased the standard deductions, making it more difficult for taxpayers in high-tax states like New York and California to itemize deductions. You can use one or the other, and if your itemized deductions are close to the standard deduction, you may be able to plan to increase tax deductions.
Your accountant should automatically take the higher of the two deductions, but if itemized deductions for a married couple filing joint are $27,000 in 2022, when the standard deduction is $25,900, and they remain the same in 2023, you will likely switch to the standard deduction of $27,700 to save a few hundred dollars of tax.
On the other hand, if itemized deductions will be close to the standard deduction, you will benefit from additional charitable deductions or from lumping several years of charitable deductions in one year and then switching back to the standard deduction in years when charitable contributions are smaller. This can be accomplished with a donor-advised fund (DAF) that will allow a large deductible contribution when itemizing in one year with distributions to charities you choose over several future years when you use the standard deduction.
Investment Advisory Services offered through Mazars USA Wealth Advisors LLC, a New York SEC Registered Investment Advisor. Securities offered through APW Capital, Inc., Member FINRA/SIPC., 100 Enterprise Drive, Suite 504, Rockaway, NJ 07866 (800) 637-3211 - Member FINRA/SIPC. Mazars USA Wealth Advisors LLC. is a separate entity from APW Capital, Inc.
The above article does not constitute legal, tax, accounting, investment or other professional advice. Recipients should consult their professional advisors for their own circumstances.
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

David Weinstock provides business succession, estate, insurance, tax, and investment planning services to high-net-worth individuals and business owners. His more than 28 years of experience are centered on delivering wealth advisory services to individuals and families. He specializes in complex estate planning matters, often integrating the efficient use of life insurance solutions to meet clients’ objectives. David has published in The CPA Journal and in Estate Planning Magazine and has been interviewed by the Wall Street Journal.
-
These Stocks Dipped in 2025. Do They Have Value?
If you are looking to add new long-term positions to your portfolio, as you should, this is the time to examine stocks that the market shuns.
-
Striking Gold (or Gas): A Financial Pro Unpacks the Nuances of Energy Investing
Investing in the energy industry, particularly oil and gas, involves understanding the facts about how projects generate returns through cash flow and long-term asset building, while also being aware of the risks.
-
Striking Gold (or Gas): A Financial Pro Unpacks the Nuances of Energy Investing
Investing in the energy industry, particularly oil and gas, involves understanding the facts about how projects generate returns through cash flow and long-term asset building, while also being aware of the risks.
-
Escaping the New Golden Handcuffs: A Financial Expert Has a Plan for Today's Executives
Feeling stuck in your job? It could be your complicated compensation package, but it also could be where you live, your family or even how you view yourself.
-
I'm a Financial Planner: Here's How to Invest Like the Wealthy, Even if You Don't Have Millions
Private market investments, once exclusive to the ultra-wealthy and institutions, have become more accessible to individual investors, thanks to regulatory changes and new investment structures.
-
Four Ways a Massive Emergency Fund Can Hurt You More Than It Helps
Saving too much could mean you're missing opportunities to put your money to work. Redirect some of that money toward paying off debt, building retirement funds, fulfilling a dream or investing in higher-growth options.
-
I'm a Financial Planner: How to Dodge a Retirement Danger You May Not Have Heard About
Timing is everything, and sequence of returns risk can mean the difference between a retirement nest egg that's overflowing … or empty.
-
Caring for Aging Parents: An Expert Guide to Easing the Financial and Emotional Strain
Early conversations, financial planning and understanding the progression of care needs can help to mitigate stress and protect family relationships.
-
I'm a Financial Adviser: The OBBB Is a Reminder for Older People to Have a Long-Term Plan
The new tax bill presents a good opportunity for retirees to revisit tax plans, look into doing some Roth conversions and consider plans for long-term care.
-
I'm an Insurance Expert: This Is Exactly Why Your Insurance Rates Are Soaring (and What You Can Do)
A dramatic rise in the frequency and cost of severe weather and wildfires means you need to prepare, prepare, prepare — no matter where you live — for higher premiums.