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Latest Tax Provisions

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Below, we provide a summary of the provisions most relevant to mutual fund investors. Please note that some of these provisions will sunset after 2025, which means those provisions revert back to "pre-Act" rates after that date, unless Congress acts again to extend them or make them permanent.

Federal Individual Income Tax Rates

The IRS offers seven tax brackets, with a top rate of 37%. The income ranges for each bracket will be indexed for inflation each year. The income ranges for each bracket will be indexed for inflation going forward, and the reduced income tax rate brackets will sunset after 2025.

Related Provisions

Amount Threshold Breakpoints

Reduced rates for Long-term capital gains and qualified dividend remain the same, but amount threshold breakpoints for each reduced rate were added based on tax filing status, and will be adjusted for inflation going forward.

Backup Withholding

Backup withholding will be 24%. Backup withholding generally applies to taxpayers whose Taxpayer Identification number does not match IRS records. It also applies to taxpayers who have under-reported their income. Individuals subject to backup withholding may also be subject to state backup withholding. This provision will sunset after 2025.

Unearned Income by Minors

Changes to taxation of unearned income by minors (aka "Kiddie Tax"). See Children's Federal Taxation Guidelines under UTMA for more information. This provision will sunset after 2025.

Marriage Penalty

The marriage penalty is permanently repealed for taxpayers in the 10%, 12%, 22%, 24%, and 32% income brackets. The standard deduction for married taxpayers in those brackets who are filing jointly is now 200% of single filers. This provision will sunset after 2025*.

*As of 2022, this penalty is only valid for certain states. Please contact your tax advisor to determine if this penalty is applicable to your situation.

Other Tax Situations

The Alternative Minimum Tax is a parallel tax system that was created to keep high income individuals from avoiding taxes through various deductions and exemptions.

The exemption amounts are indexed for inflation. This provision sunsets after 2025, indexed for inflation.

Married Filing Jointly & Surviving Spouse

2023 Exemption Amount


2023 Phase Out Begins:


Married Filing Separately

2023 Exemption Amount


2023 Phase Out Begins:


Single or Head of Household

2023 Exemption Amount


2023 Phase Out Begins:


The annual contribution limit for CESAs is fixed at $2,000. The contribution deadline for this account type is April 15th of the following year.

The Tax Cut and Jobs Act doubled the Estate and Gift Tax Exemptions from $5 million to $10 million, adjusted annually for inflation.

Estate assets are taxed at the top rate of 40% with an exemption limit of $12.92 million for 2023 (based on the estate's value as of the decedent's date of death, including adjustments). This amount will be indexed annually for inflation.

While the Tax Cuts and Jobs Act does not specifically mention the Generation Skipping Tax exemption, since that exemption follows the base exemption for estates, that exemption was also increased. This provision will sunset after 2025, indexed for inflation.

Participants in 401(k), 403(b) or 457(b) Plans can convert any amount in a non-Roth account to a Roth account if the plan permits. The requirement that an account balance can only be converted to Roth if the amount is otherwise distributable is being eliminated. This is a permanent provision, effective for transfers after December 31, 2012.

Additional Considerations:

  • Limited to once a year

  • No limit on amount you can convert

  • In-Plan Conversions are irrevocable

  • Roth In-Plan conversions are pre-tax assets into after-tax Rothyou must pay income taxes on the pre-tax contributions and any earnings that you convert to Roth.

A 3.8% Net Investment Income Tax applies to individuals, estates and trusts that have net investment income above applicable threshold amounts. Visit for more information.

A qualified charitable distribution (QCD) is a tax-free distribution from an IRA to a qualified charity. QCDs can be used to satisfy an investor's required minimum distribution (RMD) up to $100,000 per taxpayer, per taxable year. Additionally, a one-time qualified charitable distribution of up to $50,000 to a charitable remainder unitrust, charitable remainder annuity trust or charitable gift annuity may be made. To request a QCD, please use this form.

Keep these QCD rules in mind:

Payee details: Checks from the IRA must be made payable to the qualified charity. If a check is made payable to the account owner, the distribution would not qualify as a QCD and would be treated as taxable income.

Age: The account owner must be age 70½ or older.

Timing: The funds must be withdrawn by December 31 each year.

Account types: Eligible account types generally include: Rollover, Traditional and Roth IRAs, and Beneficiary IRA's, as well as inactive SEP and SIMPLE IRAs.*

Reporting: We will report your QCD on Form 1099-R for the calendar year the distribution is made. You should keep any receipts of the donation from the charity for your records.

Contact a tax advisor or visit the IRS website for more details about QCDs.

Per the IRS, a SEP or SIMPLE IRA is considered active if it has been maintained under an employer arrangement under which an employer contribution is made for the plan year ending with or within the IRA owner's taxable year in which charitable contribution would be made.

The Tax Cuts and Jobs Act eliminated the tax provision allowing for Roth Conversions to be recharacterized back to a Traditional IRA effective in 2018. Per the Internal Revenue Service, Roth Conversions performed in 2017 can be recharacterized back to a Traditional IRA up to the 2017 tax filing deadline, plus extensions (Oct. 15, 2018). This a permanent change to the tax regulations.

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IRS Circular 230 Disclosure: American Century Companies, Inc. and its affiliates do not provide tax advice. Accordingly, any discussion of U.S. tax matters contained herein (including any attachments) is not intended or written to be used, and cannot be used, in connection with the promotion, marketing or recommendation by anyone unaffiliated with American Century Companies, Inc. of any of the matters addressed herein or for the purpose of avoiding U.S. tax-related penalties.

This information is for educational purposes only and is not intended as tax advice. Please consult your tax advisor for more detailed information or for advice regarding your individual situation.

Please consult your tax advisor for more detailed information regarding the Roth IRA or for advice regarding your individual situation.

Taxes are deferred until withdrawal if the requirements are met. A 10% penalty may be imposed for withdrawal prior to reaching age 59½.

This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal or tax advice.