The US Bureau of Labor Statistics reported that the consumer price index increased just 0.1% for August after no change in July. However, inflation remains a concern because over the last 12 months, the index rose 8.3% before seasonal adjustment. And those rates could impact your 2023 tax picture.
The CPI measures the cost of goods and services in urban areas—in other words, your cost of living. It’s the most widely used measure of inflation since, as prices go up, the purchasing power of your dollar goes down. This is important information for taxpayers because the Tax Code provides for mandatory annual adjustments to certain tax items based on inflation.
Bloomberg Tax’s projected US tax rates forecast that inflation-adjusted amounts in the tax code will increase by roughly 7.1% from 2022, more than double last year’s increase of 3%.