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Will the tax brackets change in 2022 compared to the previous year?

Taxpayers that want to get a jump on their 2022 tax returns to avoid a last-minute rush can check out the IRS tax brackets for this year’s income.

Request an early payment with a tax refund loan

A record number of American taxpayers filed for an extension on their 2021 tax filings. The date has come and passed on 17 October, but keeping track of what you owe to the IRS is a year round affair to keep your records in order to avoid a last-minute scramble to find them.

Those filing tax returns will want to know how much they will be taxed on their earnings and to help in this endeavour, the IRS adjusts tax provisions and tax brackets every year to account for inflation to avoid what is known as “bracket creep.” The percentages that Americans are taxed in the seven tax brackets remained the same for 2022, but income level thresholds that determine which one you fall into were raised from 2021 levels.

The adjustment announced by the IRS last year affects more than 60 tax provisions and took effect 1 January 2022, so they did not apply to the 2021 tax returns. Taxpayers can use this data to help plan ahead for their tax liability in the coming year to avoid having a surprise bill from Uncle Sam. While the official Form 1040 hasn’t been released yet, the IRS posted a draft version in July.

2022 tax brackets

The seven brackets remain the same 10%, 12%, 22%, 24%, 32%, 35% and 37% which were set after the 2017 Tax Cuts and Jobs Act. However, the income thresholds for tax brackets are adjusted to reflect inflation or the cost of living. This is based on the Chained Consumer Price Index created by the Bureau of Labor Statistics through continuously tracking the changing price of a basket of goods and consumer purchasing behavior in response to that change.

The annual adjustment is designed to avoid “bracket creep”, when people are pushed into a higher income bracket or inflation reduces the value of other deductions or credits. So, for example instead of 10% being applied to the first $9,950 of income, it will now be applied to the first $10,275 for a taxpayer filing individually.

Also, the standard deduction will increase in 2022 by $400 to $12,950 for single filer or married but filing separately, by $600 to $19,400 for head of households and $800 to $25,900 for married taxpayers filing jointly.

An additional standard deduction of $1,400 will apply to those who are either 65 and older or blind, and the amount doubles if both apply to a taxpayer in 2022.

Dependents that can be claimed on another person’s tax return for the 2022 fiscal year are limited to a standard deduction of either $1,150 or your earned income plus $400, whichever is greater. However, the total can’t exceed the basic standard deduction for your filing status.

Single filers & Married couples filing separately$12,950
Married couples filing jointly & surviving spouses$25,900
Head of Household$19,400

Your filing status could save you extra money

There are five categories of filers and conditions apply to the one you should use to file your taxes. The main determiner is your marital status on 31 December of the year for which you are reporting taxes, that will be the one you use for the entire year. It’s possible that more than one filing status applies to you, so the IRS recommends that you use the filing status that will reduce your tax liability the most.

Five US filing statuses:

  • Single: For those who are not married, divorced or legally separated.
  • Married Filing Jointly: Married couples can choose to file a joint tax return. Widow(er)s can also use this in the year their spouse died.
  • Married Filing Separately: Married couples also have the choice of filing separately if it is more financially beneficial.
  • Head of Household: The IRS cautions not to choose the by mistake and special rules apply to qualify for this filing status. Generally, this status applies if you are not married and must have paid more than half the cost of keeping up a home for yourself and a qualifying person.
  • Qualifying Widow(er) with Dependent Child: This status is similar to married filing jointly. It is applicable for only two years and conditions apply.

For more information check the Dependents, Standard Deduction, and Filing Information in Publication 501.

To help taxpayers determine which filing status applies to them the IRS has an online tool “What Is My Filing Status?

Income taxes are progressive

The tax brackets are progressive, so if you file as a single filer and have a taxable income of $50,000, you don’t pay 22 percent on the whole of your taxable income. You would pay 10 percent on the first $10,275 ($1,027.50), 12 percent on the income between $10,275 and $41,775 ($3,780), and then 22 percent on the remaining $8,225 ($1,809.50) for a total of $6,617 as opposed to $11,000.

2022 rates by brackets

Single filers & Married couples filing separately

  • 37% for incomes over $539,900
  • 35% for incomes over $215,950
  • 32% for incomes over $170,050
  • 24% for incomes over $89,075
  • 22% for incomes over $41,775
  • 12% for incomes over $10,275
  • 10% incomes of $10,275 or less

Married couples filing jointly

  • 37% for incomes over $647,850
  • 35% for incomes over $431,900
  • 32% for incomes over $340,100
  • 24% for incomes over $178,150
  • 22% for incomes over $83,550
  • 12% for incomes over $20,550
  • 10% for incomes of $20,550 or less

Head of Household

  • 37% for incomes over $539,900
  • 35% for incomes over $215,950
  • 32% for incomes over $170,050
  • 24% for incomes over $89,050
  • 22% for incomes over $55,900
  • 12% for incomes over $14,650
  • 10% for incomes of $14,650 or less

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