Curious about the latest tax changes? Don’t worry, we’ve got you covered. We’ll highlight any tax law changes or adjustments that may affect your return, so you can continue to file stress-free. Here’s what you need to know to get ready for the upcoming season.
Federal
IRS Standard Mileage Rates
The standard mileage rate for 2023 has increased and has gone back to one rate for the entire year. The mileage rates are 65.5 cents per mile for business use and 22 cents per mile for medical and moving purposes. Who qualifies?
- Taxpayers with businesses (Sch C) or employees with unreimbursed business expenses (2106) may use the business standard mileage rate to calculate their car and truck expense deduction.
- Taxpayers who drove for medical reasons and are itemizing their deductions (Sch A) may use the medical standard mileage rate to calculate a portion of their medical expense deduction.
- Taxpayers who moved and are qualified active-duty members of the Armed Forces (3903) may use the moving standard mileage rate to calculate a portion of their moving expense deduction.
Business Meals Deduction
For 2021 and 2022 only, businesses were able to deduct the full cost of business-related food and beverages purchased from a restaurant. Starting in 2023, the deductible amount has gone back to being 50% of the cost of the meal.
Additional Child Tax Credit (ACTC)
Taxpayers who are unable to claim the full Child Tax Credit can claim the Additional Child Tax Credit (ACTC). It is now worth a maximum of $1,600 per child, up from $1,500 last year.
States
We are excited to announce that we’re planning to expand our services to more states in 2024. Connecticut, Kentucky, Minnesota, Oklahoma, Kansas, and Idaho are in the works to be added into our state filing program at ezTaxReturn. Here are some other state-level changes you need to know about.
What are the tax changes for Arizona?
- ezTaxReturn now supports the American Indian Wages subtraction. Enrolled members of American Indian tribes may subtract wages earned while living and working on their tribe’s reservation.
- Arizona taxpayers can now subtract up to $40,000 of qualified adoption expenses. You may qualify if you incurred adoption expenses in 2023 and the final adoption was granted in the same year.
- New income subtraction for the Arizona Families Tax Rebate. In 2023, Arizona distributed the “Arizona Families Tax Rebate” which is taxable at the federal level but not taxable for AZ purposes. The maximum rebate was $750 for qualifying taxpayers.
What are the tax changes for Arkansas?
- Credit for Developmentally Disabled Dependents – The form used by families to claim a $500 credit for dependents with developmental disabilities has been renamed AR1000-DD (formerly AR1000RC5).
What are the tax changes for Illinois?
- Earned Income Credit (EIC) – All IL taxpayers who would have qualified for federal EIC (met all conditions) except that they either have an ITIN instead of an SSN, are age 18-24, or over age 64 with no qualifying dependents, can now qualify for the IL EIC.
What are the tax changes for Kentucky?
- The standard deduction amount has increased to $2,980 (was $2,770).
- The tax rate for 2023 has decreased to 4.5% (was 5%)
- Family Size Tax Credit – If a taxpayer’s Modified Gross income is $39,900 or less (maximum amount for a family of 4), they are eligible for the Family Size Tax Credit.
- This is a newly added state in the ezTaxReturn program. We support:
- Deceased returnsAmended returnsPension exclusionPersonal tax credits (based on age and disability)Family Size Tax CreditKentucky education credits
- Child and Dependent Care Credit (20% of federal credit)
What are the tax changes for Louisiana?
- Electric and Hybrid Vehicle Road Usage Fee – Drivers who own or lease an electric or hybrid vehicle registered and operated in Louisiana will now pay a road usage fee. The fee is based on a calendar year and is prorated if the vehicle was owned or leased for less than a year.
- Stillborn Child credit – A refundable credit for mothers who delivered a stillborn child. The credit can be claimed for the year the loss occurred and is worth $2,000.
- Funeral and Burial Expense for a Pregnancy-related Death credit – This is a refundable credit for the funeral and burial expenses associated with a pregnancy-related death. The credit is worth up to $5,000, depending on the actual reasonable funeral and burial expenses paid.
- Adoption of Unrelated Infant credit – This is a refundable credit for taxpayers who adopt a child who is unrelated to them and no more than 2 years old. The credit is worth up to $5,000 and is claimed the year the adoption is finalized.
- Deduction for Certain Adoptions – Taxpayers who adopt a child in foster care, a youth receiving extended foster care services, or an unrelated infant who is less than one year of age through a private agency or attorney may qualify for a $5,000 deduction. The deduction must be claimed the year the adoption is finalized.
- ezTaxReturn now supports returns for deceased taxpayers.
What are the tax changes for Maryland?
- Union Dues (New Subtraction) – Taxpayers can subtract the amount of union dues they pay from their taxable income.
- Student Loan Debt Relief Credit Recapture – Taxpayers must repay unused student loan debt relief tax credit. If any amount of the credit was not used to repay undergrad or graduate student loan debt, taxpayer must repay the entire credit claimed.
- Military Retirement Subtraction Increase
- Individuals at least 55 years of age on the last day of the taxable year may claim up to $20,000 (was $15,000) of military retirement income, including death benefits, received in the taxable year.
- Individuals under the age of 55 on the last day of the taxable year may claim up to $12,500 (was $5,000) of military retirement income received in the taxable year.
- Child and Dependent Care Expense Credit Phase-out Threshold – Taxpayers with AGI under $103,650 or $161,100 (MFJ) [Previously $102,600 or $159,500 (MFJ)] may claim a credit for dependent care expenses.
What are the tax changes for Michigan?
- Form 5792 added a second page for non-qualified withdrawals from Michigan First-Time Homebuyer Savings Program.
- Form 4884 has a new line 6a checkbox. You must select whether you earned your qualified retirement benefits from serving as a firefighter, police officer, or county corrections officer.
- Form 4884 has a new Section D. Depending on your situation, you may be asked to fill out Section A, B, C, or D to claim the Total Retirement and Pension Benefits Subtractions.
- Form 4642 – New Anatomical Gift Donor Registry – Michigan residents now have the option to join Michigan’s organ donor registry upon filing their state income tax return (MI-1040).
- We now support Form 1040CR-7, so you can claim the Michigan Home Heating Credit when you file with us.
What are the tax changes for Minnesota?
- Minnesota is one of the new states added to the ezTaxReturn program.
- New form M1CWFC replaced previous M1WFC to include MN child tax credit. The Working Family Credit is 4% of your first $8,750 of earned income plus an additional amount for up to three qualifying older children. The Minnesota Child Tax Credit is $1,750 for each qualifying child under the age of 18.
- For tax year 2023, you may subtract your taxable social security benefits from your Minnesota taxable income.
- Qualified retirement benefits subtraction – There’s a new subtraction for taxpayers who received certain pension pay for public service.
- Taxpayers can now subtract the amount of damages received under a sexual harassment or abuse claim related to personal physical injuries or physical sickness.
- You can now subtract the amount received from the Long-term Service and Support Workforce Incentive Grant program during 2023. The maximum is $1,000.
- There’s a new subtraction for the amount received from the Nursing Facility Workforce Incentive Grant program. The maximum is $3,000.
- We now support deceased returns for Minnesota.
What are the tax changes for Mississippi?
- Dependent Care Credit – There’s a new nonrefundable credit for Mississippi taxpayers who have a federal AGI of $50,000 or less and qualify for the federal Child and Dependent Care Tax Credit. This state level credit is worth 25% of your federal Child and Dependent Care Tax Credit.
What are the tax changes for New Jersey?
- Health insurance assistance – ANY NJ taxpayer who does not currently have health insurance coverage and agrees to sign up for it and maintain it for the remainder of the year can have the penalty for being uninsured waived on next year’s tax return.
- The Child Tax Credit amount has doubled for TY2023.
What are the tax changes for North Carolina?
- Tax Rate Reduction – The tax rate for 2023 is 4.75% (was 4.99%).
What are the tax changes for Oklahoma?
- Credit for Adoption Expenses – Parents who adopt may qualify for a credit equal to 10% of qualified adoption expenses. The maximum credit is $2,000 for individuals and $4,000 for married filing jointly, head of household or qualifying widow.
- Volunteer Firefighter Credit – Taxpayers who have completed and signed a Firefighter Training Advisory Committee (FTAC) form may qualify for a $200 or $400 credit.
What are the tax changes for Virginia?
- Sales and Use Tax for Eligible Food Items and Personal Hygiene Products – These items are subject to a 1% general local sales and use tax in all cities and counties in Virginia. The 1.5% general state tax has been removed.
- Military Retirement Benefits Subtraction – The maximum amount of the military retirement benefits subtraction for 2023 is $20,000 (was $10,000).
What are the tax changes for Wisconsin?
- Earned Income Credit – Taxpayers claiming Wisconsin EIC can have up to $11,000 of investment income (was $3,800).
- Capital Loss Deduction – The amount of capital loss that can be applied against other income has increased to $3,000 (was $500).
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The articles and content published on this blog are provided for informational purposes only. The information presented is not intended to be, and should not be taken as, legal, financial, or professional advice. Readers are advised to seek appropriate professional guidance and conduct their own due diligence before making any decisions based on the information provided.
