Expiring Tax Credits in 2023
As the year comes to an end, it's important for taxpayers to be aware of certain tax credits that are set to expire in 2023. These credits can significantly affect your tax liability and financial planning.
1. Child Tax Credit
The enhanced Child Tax Credit, which provided up to $3,600 per child under 6 and $3,000 per child ages 6 to 17, is set to revert to its pre-pandemic levels. Taxpayers should prepare for a reduction to $2,000 per qualifying child.
2. Earned Income Tax Credit (EITC)
Temporary expansions of the EITC for childless workers, which allowed for higher income thresholds and age limits, will also expire. Many low-income earners may find themselves with a reduced benefit in coming tax seasons.
3. American Opportunity Tax Credit
This credit, which helps cover the cost of higher education expenses for students in their first four years, may also see changes. Congress is reviewing its continuation as part of broader tax reforms.
4. Energy Efficient Home Improvement Credit
The expanded credits for energy-efficient home improvements are set to expire. Taxpayers investing in energy upgrades may not receive the same level of refunds after this year.
Conclusion
It's crucial to stay informed about these expiring tax credits as they will directly impact the financial benefits available to taxpayers in 2024 and beyond. Consult with a tax professional to explore your options and plan accordingly.