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Your New 2022 Tax Rates & More

 

The Internal Revenue Service recently announced their annual inflation adjustments for the tax year 2022. Higher recent inflation means that some of these numbers are up by a greater degree compared to recent years. However, there is one big caveat to these 2022 numbers: Democrats are still trying to pass further social safety net and climate bills in the final months of 2021 which could have tax consequences as early as 2022.  That being said, here is what we know today:

 

Married Filing Joint 2022 Tax Brackets

Tax rate Taxable income bracket Taxes owed
10% $0 to $20,500 10% of taxable income
12% $20,501 to $83,550 12% of the amount over $20,500
22% $83,551 to $178,150 22% of the amount over $83,550
24% $178,151 to $340,100 24% of the amount over $178,150
32% $340,101 to $431,900 32% of the amount over $340,100
35% $431,901 to $647,850 35% of the amount over $431,900
37% $647,851 or more 37% of the amount over $647,850

 

Single Filer2022 Tax Brackets

Tax rate Taxable income bracket Tax owed
10% $0 to $10,275 10% of taxable income
12% $10,276 to $41,775 12% of the amount over $10,275
22% $41,776 to $89,075 22% of the amount over $41,775
24% $89,076 to $170,050 24% of the amount over $89,075
32% $170,051 to $215,950 32% of the amount over $215,950
35% $215,951 to $539,900 35% of the amount over $215,950
37% $539,901 or more 37% of the amount over $539,900

 

Other Notable Items (Subject to change based on Legislation Changes)

  • Standard Deduction amounts are now $12,950 for Single, and $25,900 for Married Filing Joint
  • Capital Gains rates are remaining at either 0%, 15%, or 20% depending on taxable income levels
  • Federal Estate Tax Exemption moves to $12.06M per person or $24.12M for a married couple
  • Annual Gift Tax exclusion changes to $16,000 (was previously $15,000)

 

Retirement Account Proposed Changes

  • Salary Deferral Limit for workplace retirement plans goes from $19,500 to $20,500
  • Overall retirement plan contribution limit (including employer contributions) is now $61,000 or $67,500 if over age 50
  • SIMPLE IRA contribution limits jump to $14,000 per year
  • Traditional IRA and Roth IRA contribution limits remain at $6,000 or $7,000 if over age 50

 

As stated, this information is subject to change depending on the final bills to come out of Washington before year-end.  Regardless the key takeaway is that due to some high inflation, we currently have some meaningful expected changes that will be made to both taxable income brackets and retirement savings thresholds.

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Van Gelder Financial