The U.S. Treasury Department sets tax collection policy and tax laws. A branch of the U.S. Treasury is the Internal Revenue Service (IRS) that has adjusted tax brackets for the next year, which moves you into the next higher tax bracket than where you are now. Also, the federal government has released cost of living numbers and determined the inflation rate to be 4% annually. Both of these situations impact your budget and your financial plan. What parts of your budget and plan need adjusting? What alternatives are available to reduce taxes? How will you ensure the modifications to your budget and plan are effective?