Associate Financial Planner, Lance Knaack, provides updates in regards to upcoming personal income and retirement income tax changes.
Personal Income Tax Changes:
Currently the top income level is $73,710 taxed at a 8.53% rate.
The rate will change to 6% in 2023, 5.7% in 2024, 4.82% in 2025, and 3.9% for the tax year 2026 and beyond.
The number of tax brackets will decrease until 2026 and there will be a single tax bracket at a 3.9% rate.
Retirement Income Tax Changes:
New in 2023 is the retirement income tax exemption.
All income defined as retirement income (pensions, defined contribution plans, annuities, individual retirement accounts, plans maintained or contributed to by an employer, self-employed plans, and deferred compensation plans) will be exempt from state personal income tax.
This applies to taxpayers 55 years or older and those taxpayers who are disabled.
As always, reach out to your financial planner or associate financial planner at Syverson Strege for more details about the changes in these laws.
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