Skip to main content

2022 Tax Brackets Are Here: Here’s What You’ll Owe Next Year

Rising inflation means higher tax brackets and a larger standard deduction.

On Wednesday, the IRS released its 2022 federal income tax rates and brackets. The IRS automatically adjusts tax rates each year to reflect inflation. The breakpoint for each tax bracket will be about 3% higher across the board in 2021.

2022 Tax Brackets 

There are seven tax brackets that range from 10% to 37%. You’ll use the 2022 brackets to determine your tax bill that will be due in 2023. You’ll use 2021 brackets when you file your taxes on or before April 15, 2022.

Unmarried Individuals

Unmarried Individuals

Tax Bracket Taxable Income for 2022 (use when you file in 2023) Taxable income for 2021 (use when you file in 2022)
10% Up to $10,275 Up to $9,950
12% $10,275 to $41,775 $9,950 to $40,525
22% $41,775 to $89,075 $40,525 to $86,375
24% $89,075 to $170,050 $86,375 to $164,925
32% $170,050 to $215,950 $164,925 to $209,425
35% $215,950 to $539,900 $209,425 to $523,600
37% Over $539,900 Over $523,600

Married Individuals Filing Jointly or Surviving Spouses

Tax Bracket Taxable income for 2022 (use when you file in 2023) Taxable income for 2021 (use when you file in 2022)
10% Up to $20,550 Up to $19,900
12% $20,550 to $83,550 $19,900 to $81,050
22% $83,550 to $178,150 $81,050 to $172,750
24% $178,150 to $340,100 $172,750 to $329,850
32% $340,100 to $431,900 $329,850 to $418,850
35% $431,900 to $647,850 $418,850 to $628,300
37% Over $647,850 Over $628,300

Heads of Household

Tax Bracket Taxable income for 2022 (use when you file in 2023) Taxable income for 2021 (use when you file in 2022)
10% Up to $14,650 Up to $14,200
12% $14,650 to $55,900 $14,200 to $54,200
22% $55,900 to $89,050 $54,200 to $86,350
24% $89,050 to $170,050 $86,350 to $164,900
32% $170,050 to $215,950 $164,900 to $209,400
35% $215,950 to $539,900 $209,400 to $523,600
37% Over $539,900 Over $523,600

Pro Tip

Not sure of your filing status? This interactive IRS quiz can help you determine the correct status. If you qualify for more than one, it tells you which one will result in the lowest tax bill.

Tax rates apply to the income within each bracket. So if you’re an unmarried individual with taxable income of $50,000, you won’t pay 22% of that $50,000 to Uncle Sam.

According to the 2022 tax brackets (the ones you’ll use when you file in 2023), you’d pay:

  • 10% on the first $10,275, or $102.75
  • 12% on the next $31,500 ($41,775 – $10,275 = $31,500), or $453.60
  • 22% on the next $8,225 ($50,000 – $41,775 = $8,225), or $1,809.50
  • Total tax bill: $2,365.85

Even though your marginal tax rate is 22%, you’d only pay 4.73% of your taxable income to Uncle Sam if you’re a single filer with $50,000 of taxable income.

3 Tax Changes to Know for 2022

The modified tax brackets aren’t the only changes for 2022. About 60 tax provisions were adjusted in the new year. A few highlights:

1. The Standard Deduction Is Higher

Most taxpayers get the biggest tax savings by taking advantage of the standard deduction instead of itemizing. For 2022, the standard deduction is:

  • $12,950 for single filers and people who are married filing separately, a $400 increase.
  • $25,900 for married couples and surviving spouses, an $800 increase.
  • $19,400 for heads of household, a $600 increase.

2. Some Limited-Income Families Can Get an Extra $207

The maximum Earned Income Tax Credit will increase in 2022 to $6,935, from $6,728 in 2021. You need at least three children to qualify for the maximum amount.

3. You Can Contribute an Extra $1,000 to Your 401(k)

If you have an employer-sponsored tax-deferred retirement plan, like a 401(k) or 403(b), your maximum contribution is $20,500 in 2022, up $1,000 from $19,500 in 2021. The additional “catch-up” contribution workers ages 50 and older can make will remain at $6,500.

2 Tax Rules That Aren’t Changing in 2022

Here are two tax rules that aren’t changing in the new year.

1. IRA Contribution Limits Won’t Change

The traditional IRA and Roth IRA contribution limits will remain at $6,000 for people under 50. The extra $1,000 “catch-up” contribution the IRS allows people 50 and older to make won’t change either.

2. There’s No Limit on Itemized Deductions

The Tax Cuts and Jobs Act of 2017 suspended these limits.

Ready to Start Your 2022 Tax Prep?

If you’re ready to dive into your taxes, you can check out this comprehensive summary of 2022 tax changes courtesy of the IRS.

Even if you’re not ready to jump into 2022 tax planning mode just yet, keep in mind it’s a good time to check your tax withholdings and make adjustments if necessary. Just make sure you file your 2021 return or ask for an extension by the April 15, 2022 deadline. If you can’t afford your tax bill for 2021, it’s essential that you file a tax return anyway and ask for an IRS payment plan.


This post on TessMore Finance was also published on The Penny Hoarder.



The Penny Hoarder https://ift.tt/34UWTlu

Comments

Popular posts from this blog

How to Ask Your Manager for Feedback (& easily impress them)

Your manager is either your greatest friend, or your biggest obstacle. No matter where your manager stands on this spectrum, getting feedback from them is going to be a valuable resource for your professional growth so this is something you should be doing consistently at work if you want to get more promotions and raises. […] Source from I Will Teach You To Be Rich https://ift.tt/XNUxhGu

Cost Income Ratio: Definition, Formula, Calculation, and Interpretation

Financial managers perform a wide range of calculations and activities to analyze a company’s yearly and quarterly performance. Cost to income ratio is one of the efficiency ratios used in financial management.  The cost to Income ratio is used to evaluate a company’s performance. Its fundamental role is to validate the profitability of the company. Financial managers use this efficiency formula to compare operating expenses or costs with the income generated.  The cost-income ratio portrays the effectiveness at which the company is being run. There is a roundabout connection between the expense ratio and the organization’s benefit. It is considered that the lower the cost to income ratio, the better is the performance of the company.  In this article, we’ve highlighted everything about the cost-income ratio to help you understand this financial management ratio quickly and easily. How is a cost to income ratio defined?  The cost-income ratio is defined as a rat...

Best Crypto Sign-Up Bonuses and Promotions

Many cryptocurrency exchanges offer sign-up bonuses to draw potential customers. You can receive free Bitcoin or funds you can use to purchase your preferred altcoin, depending on the offer. The terms and conditions vary, from the bonus amounts to the qualifying criteria. Most exchanges will pay you a few dollars for completing your first trade. However, the more valuable promotions may allow you to receive up to $500 or more, in line with many stock brokerage bonuses . Here is a list of the sign-up bonuses covered in this article: Binance.US : $10  Coinbase: $5 Crypto.com : $50 eToro: $10 Gemini: $10 KuCoin: Up to $500 Phemex: Up to $6,500 Plynk: Up to $100 SoFi : Up to $100 Tastytrade : Up to $2,000 TradeStation : $150 Table of Contents Best Crypto Sign-Up Bonus Offers Binance.US Coinbase Crypto.com eToro Gemini   KuCoin Phemex Plynk SoFi Tastytrade TradeStation FAQs What Is the Best Crypto Sign-Up Bonus? Best Crypto Sign-Up Bon...