I am trying to understand why the deduction for my '23 IRA Contribution of $7500 seems low. It doesn't appear that the '23 Premier version is giving me credit for the full amount of the deduction, which I believed would reduce my taxes dollar-for dollar. I am married, filing jointly. I have entered that I am not covered by a retirement plan at work, but that my wife is covered by one at hers. We are under the $218,000 AGI threshold. The full $7500 contribution appears to only reduce my tax bill by $1769, which seems low. Is this correct, or is there possibly a bug in the software? Thank you for any help you can offer.
The $7,500 contribution does not reduce your tax dollar for dollar. It is a tax deduction, not a tax credit.
The result on your tax return sounds correct. It seems that without the $7500 deduction about $5950 of your taxable income falls in the 24% tax bracket. With the deduction is seems that your taxable income is reduced to about $189,200.
When you file as a couple, and your spouse is covered by a retirement plan at work and you aren't, with a MAGI of less than $218,000, you are allowed a full deduction of your IRA contribution (up to $7,500 if you are 50 or over).
See this IRS document.
But the IRA deduction is a tax deduction, it reduces your taxable income, but doesn't reduce your tax liability dollar for dollar.
Looks like your marginal rate of taxation is 24%, and the $7,500 deduction reduces your taxes by $7,500 x 24% = $1,800.