The Internal Revenue Service (IRS) announced adjustments for the 2022 tax year. Below, you will find the significant tax provisions that will affect individuals.
Tax Rates and Income Bracket Changes
There are still seven tax rates in 2022 that will be applied to tax returns filed in 2023. Here are the income bracket changes by filing status.
|2022 Tax Rate||Income|
|10%||$0 - $10,275|
|12%||$10,276 - $41,775|
|22%||$41,776 - $89,075|
|24%||$89,076 - $170,050|
|32%||$170,051 - $215,950|
|35%||$215,951 - $539,900|
|37%||$539,901 and up|
Married Filing Jointly
|2022 Tax Rate||Income|
|10%||$0 - $20,550|
|12%||$20,551 - $83,550|
|22%||$83,551 - $178,150|
|24%||$178,151 - $340,100|
|32%||$340,101 - $431,900|
|35%||$431,901 - $647,850|
|37%||$647,851 and up|
Standard Deduction: For single taxpayers and married individuals filing separately, the standard deduction will be $12,950, which is a $400 increase. For married filing jointly, the amount will be $25,900, which is an $800 increase. For heads of households, the amount will be $19,400, which is a $600 increase.
Alternative Minimum Tax (AMT)
|Filing Status||Exemption Amount||Threshold Phaseout Amount||Complete Phaseout Amount|
|Joint Returns or Surviving Spouses||$118,100||$1,079,800||$1,552,200|
|Unmarried Individuals (other than Surviving Spouses)||$75,900||$539,900||$843,500|
|Married Individuals Filing Separate Returns||$59,050||$539,900||$843,500|
|Estates and Trusts||$26,500||$88,300||$194,300|
The 28% alternative minimum tax rate applies to excess AMT income of $206,100 for all taxpayers and $103,050 for married couples filing separate returns.
Earned Income Tax Credit (EITC): The maximum amount for qualifying taxpayers is $6,935, which is a $207 increase from 2021.
Qualified Transportation Fringe Benefit: The monthly limitation for the qualified transportation fringe benefit and monthly qualified parking has increased to $280.
Medical Savings Account: For self-only coverage, the plan must have an annual deductible that is not less than $2,450 (a $50 increase) and not more than $3,700 (a $100 increase from the previous year). The out-of-pocket expenses to be paid cannot exceed $4,950 which is an increase of $150.
Foreign Earned Income Exclusion: The exclusion amount is $112,000, an increase of $3,300 from 2021.
Estate Exclusion: The basic exclusion amount for decedents who die in 2022 is $12,060,000, which is a $360,000 increase from 2021.
Gift Exclusion: The annual exclusion is $16,000, which is a $1,000 increase from the previous calendar year.
Adoption Credit: The max credit for qualified adoption expenses is $14,890, which is a $450 increase.
Kiddie Tax: For taxable years starting in 2022, the amount used to reduce the unearned income of minor children is $1,150.
Maximum Capital Gains: For 2022, the 0% rate is $83,350 for married filing jointly, $55,800 for heads of households, $41,675 for single and married individuals filing separately, and $2,800 for estates or trusts.
The 15% rate is $517,200 for joint returns or surviving spouses, $258,600 for married individuals filing separately, $488,500 for heads of household and $459,750 for all other individuals. For estates and trusts, the 15% rate is $13,700.
School Teacher Expenses: The maximum deduction is $300 for elementary and secondary teachers for books, supplies, computer equipment and supplementary materials.
Cafeteria Plans: The dollar limitation on voluntary employee salary reductions for contributions to health flexible spending arrangements is $2,850. The maximum carryover is $570 if the cafeteria plan permits carryover of unused amounts.
Qualified Business Income: For married filing joint the threshold under Sec. 199A is $340,100. The threshold amount for married filing separate and all other returns is $170,050. The phase-in amount for married filing joint returns is $440,100. The phase-in amount for married filing separate and all other returns is $220,050.
Interest on Education Loans: The $2,500 maximum deduction for interest paid on qualified education loans phases out for taxpayer with modified adjusted gross income (MAGI) exceeding $70,000 and is completely phased out at MAGI of $85,000. For joint returns it begins to phaseout at $145,000 and completely phases out at $175,000.
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