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On Nov. 10, 2021, the IRS announced ostentation adjustments for 2022 affecting modular deductions, taxation brackets, and more. The changes—effective erstwhile you record successful 2023—are the effect of higher ostentation successful 2021. These adjustments, which use to much than 60 taxation provisions, are made annually by the IRS to debar bracket creep oregon the pushing of taxpayers into higher taxation brackets owed to inflation.
The changes use to the 2022 taxation year, for taxes filed successful 2023. Changes for 2021, for taxes filed successful 2022, were issued by the IRS past year. Here is however the ostentation adjustments for 2022 impact taxpayers.
Key Takeaways
- Basic taxation rates person not changed for 2022 though income levels (brackets) for each complaint have.
- Standard deductions and astir 60 different provisions person been adjusted for ostentation to debar bracket creep.
- The maximum Earned Income Tax Credit for 2022 volition beryllium $6,935 vs. $6,728 for taxation twelvemonth 2021 for taxpayers with 3 oregon much qualifying children.
- Basic exclusion for decedents who dice successful 2022 volition beryllium $12,060,000 vs. $11,700,000 for 2021.
- The yearly acquisition exclusion for calendar twelvemonth 2022 volition beryllium $16,000 vs. $15,000 for 2021.
Standard Deduction
The modular deduction—which is claimed by the immense bulk of taxpayers—will summation by $800 for joined couples filing jointly, going from $25,100 for 2021 to $25,900 for 2022. For azygous filers and joined individuals who record separately, the modular deduction volition emergence by $400, from $12,550 to $12,950. For heads of households, the modular deduction volition beryllium $19,400 for taxation twelvemonth 2022, $600 much than this year.
Beginning successful 2022, the further modular deduction magnitude for anyone who is 65 oregon older—or blind—will beryllium $1,400. The magnitude for 2021 is $1,350. If you are some 65+ and blind, you get 2 of those further deductions.
The deduction for an idiosyncratic who tin beryllium claimed arsenic a babelike by different payer is constricted to the greater of $1,150, oregon the sum of $400 and the individual's earned income (but not much than the modular deduction of $12,950 for 2022).
Tax Rates Not Changed, But Brackets Increase
Marginal taxation rates for 2022 volition not alteration but the level of taxable income that applies to each complaint is going up. The apical complaint of 37% volition use to income implicit $539,900 for individuals and heads of household and $647,850 for joined couples who record jointly. The afloat database of taxation rates and brackets for 2022 appears successful the array below.
| Rate | Married Filing Jointly, Surviving Spouse | Married Filing Separately | Single | Head of Household |
| 37% | Over $647,850 | Over $323,925 | Over $539,900 | Over $539,900 |
| 35% | Over $431,900 to $647,850 | Over $215,950 to $323,925 | Over $215,950 to $539,900 | Over $215,950 to $539,900 |
| 32% | Over $340,100 to $431,900 | Over $170,050 to $219,950 | Over $170,050 to $215,950 | Over $170,050 to $215,950 |
| 24% | Over $178,150 to $340,100 | Over $89,075 to $170,050 | Over $89,075 to $170,050 | Over $89,050 to $170,050 |
| 22% | Over $83,550 to $178,150 | Over $41,775 to $89,075 | Over $41,775 to $89,075 | Over $55,900 to $89,050 |
| 12% | Over $20,550 to $83,550 | Over $10,275 to $41,775 | Over $10,275 to $41,775 | Over $14,650 to $55,900 |
| 10% | $0 to $20,550 | $0 to $10,275 | $0 to $10,275 | $0 to $14,650 |
Maximum Long-Term Capital Gains
Capital gains rates are little than your mean income taxation complaint and beryllium connected your taxable income and filing status. For 2022, the maximum zero complaint taxable income magnitude volition beryllium $83,350 for joined couples filing jointly and for surviving spouses. The magnitude for heads of household is $55,800. For a joined idiosyncratic filing separately oregon immoderate different idiosyncratic it's $41,675. The maximum zero complaint for an property oregon spot is $2,800.
$517,200
The taxable income magnitude for a joined mates filing jointly supra which the 20% semipermanent superior gains taxation applies. The magnitude for an idiosyncratic is $459,750.
The 15% superior gains complaint volition use to adjusted nett superior gains up to $517,200 for associated returns and surviving spouses, $488,500 for caput of household, $459,750 for immoderate different individual, and $13,700 for an property oregon trust. Above these levels, the superior gains complaint is $20%.
| Rate | Single, Income Over | Married Filing Jointly, Income Over | Heads of Household, Income Over |
| 0% | $0 | $0 | $0 |
| 15% | $41,675 | $83,350 | $55,800 |
| 20% | $459,750 | $517,200 | $488,500 |
Alternative Minimum Tax
The Alternative Minimum Tax (AMT) requires high-income taxpayers to cipher their taxation measure twice—once nether the mean income taxation strategy and again nether the AMT. The payer past pays the higher magnitude of the two. The AMT is levied astatine 2 rates: 26% and 28%.
The AMT taxable income exemption magnitude for 2022 is $75,900 for azygous taxpayers and $118,100 for joined couples filing jointly. Married individuals filing separately are exempt up to $59,050 and estates and trusts are exempt up to $26,500. Exemptions signifier retired astatine 25 cents per dollar earned erstwhile Alternative Minimum Taxable Income (AMTI) reaches $539,900 for azygous filers and $1,079,800 for joined taxpayers who record jointly.
The 28% AMT complaint applies to excess AMTI of $206,100 for each taxpayers, but joined couples filing abstracted returns ($103,050). Under these amounts, the complaint is 26%.
The AMT exemption magnitude for a kid to whom the "kiddie tax" applies whitethorn not transcend the full of the child's earned income positive $8,200.
2022 Earned Income Tax Credit (EITC)
The maximum Earned Income Tax Credit (EITC) successful 2022 for azygous and joined filing jointly filers is $560 if the filer has nary children. The maximum recognition is $3,733 for 1 qualifying child, $6,164 for 2 children, and $6,935 for 3 oregon much children.
2022 Child Tax Credit
Unless Congress takes action, the Child Tax Credit successful 2022 volition revert backmost to $2,000 per qualifying child, taxable to phaseouts starting astatine income of $400,000 for associated filers and $200,000 for azygous taxpayers. At $440,000, associated filers person nary credit. The refundable information of the Child Tax Credit adjusted for ostentation volition summation from $1,400 to $1,500 successful 2022.
Maximum Exclusion for Gifts
For 2022, the archetypal $16,000 of gifts to immoderate idiosyncratic are excluded from tax. This is up $1,000 from 2021. Gifts to spouses who are not U.S. citizens is accrued to $164,000 from $159,000.
What Is Bracket Creep?
Bracket creep happens erstwhile ostentation pushes income into a higher taxation bracket. This results successful an summation successful income taxes but nary summation successful purchasing power.
What's the Contribution Limit connected Cafeteria Plans for 2022?
For taxable years opening successful 2022, determination volition beryllium a $2,850 bounds connected voluntary worker wage reductions for contributions to wellness flexible spending arrangements, up $100 from 2021. If the program permits the carryover of unused amounts, the maximum carryover magnitude is $570.
What Is the Standard Deduction for Tax Year 2022?
The modular deduction for joined couples goes up to $25,900 for taxation twelvemonth 2022. Single filers and joined individuals who record separately volition get a $12,950 modular deduction, and heads of households volition spot a emergence of $600 to $19,400.
Article Sources
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IRS, "Topic No. 551: Standard Deduction." Accessed Nov. 11, 2021.
Internal Revenue Service. "26 CFR 601.602: Tax forms and instructions." Page 14. Accessed Nov. 11, 2021.
Internal Revenue Service. "26 CFR 601.602: Tax forms and instructions." Pages 8&9. Accessed Nov. 11, 2021.
Internal Revenue Service. "26 CFR 601.602: Tax forms and instructions." Page 13. Accessed Nov. 11, 2021.
Internal Revenue Service. "26 CFR 601.602: Tax forms and instructions." Page 10. Accessed Nov. 11, 2021.
Internal Revenue Service. "26 CFR 601.602: Tax forms and instructions." Page 9. Accessed Nov. 11, 2021.
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