Tax Brackets 2022: How Much Will You Pay Based on Latest IRS Inflation Adjustments?

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The Internal Revenue Service is adjusting tax brackets for the 2022 tax year, which culminates on Tax Day, Friday, April 15, 2022. The IRS isn’t changing the percentages people will pay in the various brackets, but they are changing the adjusted gross income (AGI) amounts that determine your tax bracket.

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Depending on how you file, and your AGI for 2021, you could end up in a lower bracket for 2021 than you did for 2020, which could reduce your overall tax liability. Remember, you may also qualify for an extended Child Tax Credit in 2022, especially if you opted out of advance CTC payments but qualified for them.

The IRS website defines the new tax brackets as follows:

  • 10% for incomes of $10,275 or less ($20,550 for married couples filing jointly, $14,650 for heads of household)
  • 12% for incomes over $10,275 ($20,550 for married couples filing jointly, $14,651 for heads of household)
  • 22% for incomes over $41,775 ($83,550 for married couples filing jointly, 89,051 for heads of household)
  • 24% for incomes over $89,075 ($178,150 for married couples filing jointly, $89,050 for heads of household)
  • 32% for incomes over $170,050 for singles and heads of household ($340,100 for married couples filing jointly)
  • 35%, for incomes over $215,950 for singles and heads of household ($431,900 for married couples filing jointly)
  • 37% for incomes over $539,900 for singles and heads of household ($647,850 for married couples filing jointly)

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Other Tax Law Changes You Should Know

In addition to this re-shuffling, the IRS has also made other adjustments to accommodate for inflation. The standard deduction for married couples filing jointly has gone up by:

  • $800, to $25,900 for married couples filing jointly
  • $600, to $19,400 for heads of household
  • $400, to $12,950 for single taxpayers

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The Alternative Minimum Tax exemption amount has also increased to $75,900. It begins to phase out at $539,900. It has been raised to $118,100 for married couples filing jointly, where it begins to phase out at $1,079,800.

The maximum Earned Income Tax Credit has increased for qualifying taxpayers with three or more children, rising from $6,728 in the 2021 tax year up to $6,935 for 2022 tax filings.

If you have a Health Savings Account (HSA), you may wish to increase your contribution, as the individual limit for contributions — which are taken from pre-tax income — has risen by $150 for individuals and $250 for family plans.

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Additionally, the IRS has raised the annual exclusion for gifts — the amount of gifts you may receive without paying taxes on the value — to $16,000 for the 2022 calendar year and $15,000 for the 2021 calendar year.

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If you adopted a child in 2021, you can deduct up to $14,890 in qualifying expenses, a $450 increase from the prior year.

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If you have questions about the new tax brackets, exclusions or changes to the CTC, it’s smart to speak with a tax accountant or another professional who can help you file your returns this year.

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About the Author

Dawn Allcot is a full-time freelance writer and content marketing specialist who geeks out about finance, e-commerce, technology, and real estate. Her lengthy list of publishing credits include Bankrate, Lending Tree, and Chase Bank. She is the founder and owner of GeekTravelGuide.net, a travel, technology, and entertainment website. She lives on Long Island, New York, with a veritable menagerie that includes 2 cats, a rambunctious kitten, and three lizards of varying sizes and personalities – plus her two kids and husband. Find her on Twitter, @DawnAllcot.

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