Every year when people prepare for tax season, they are usually told about the changes. 2022 is no different with IRS changes.
2021 has seen significant inflation rates resulting in adjustments by the IRS.
While these changes won’t necessarily impact this year’s tax return, they will impact 2023.
Major changes made by the IRS this year
Standard deductions granted by the IRS
Standard deductions allow taxpayers to have a fixed amount of income that is not federally taxed.
The amount for 2022 has increased.
Couples will see an increase of $800, bringing their standard deduction to $25,900 this year.
Single filers will see an increase of $400, bringing their standard deduction to $12,950.
Those filing as head of household will see an increase of $600, bringing their standard deduction to $19,400.
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Federal tax brackets
The tax rates will remain the same at 10%, 12%, 22%, 24%, 32%, 35% and 37%.
In order to keep up with inflation, the tax brackets are adjusted.
The following tax brackets are for federal income in 2022
Single registrants
- 10% – on income from $0 to $10,275
- 12% – on income $10,276 – $41,775
- 22% – on income $41,776 – $89,075
- 24% – on income $89,076 – $170,050
- 32% – on income $170,051 – $215,950
- 35% – on income $215,951 – $539,900
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Married filing jointly
- 10% – on income from $0 to $20,550
- 12% – on income $20,551 – $83,550
- 22% – on income $83,551 – $178,150
- 24% – on income $178,151 – $340,100
- 32% – on income $340,101 – $431,900
EITC, or Earned Income Tax Credit
Low to middle income working families benefit from this credit.
The EITC was raised to $6,935 after being raised from $207.
What credit you get depends on your overall income and the number of children you have.
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Contributions to your retirement accounts
When you put money into accounts like your 401k, you can reduce what you owe in taxes.
The amount you can contribute has increased for 2022.
The contribution limit is now $20,500, up from $1,000.
People over 50 can contribute an additional $6,500 as a catch-up contribution.
