EACH year typically brings with it a number of tax changes – and 2022 is no different.

Below we round up key changes and inflation adjustments by the IRS, which will affect the tax return you file in 2023.

Standard deductions change

The standard deduction ensures that all taxpayers have at least some income that is not subject to federal income tax.

And for 2022, this amount has increased.

According to the IRS, the standard deduction for couples will rise to $25,900 in 2022, up by $800 in 2021.

For single taxpayers and married individuals filing separately, the standard deduction has risen to $12,950. This is a $400 increase.

For heads of households, the standard deduction will be $19,400. This deduction has also increased by $600.

New federal tax brackets

The tax rates will not change. For 2022, they’re still set at 10%, 12%, 22%, 24%, 32%, 35% and 37%.

However, the tax brackets have been adjusted to account for inflation. We’ve listed these for 2021 and 2022 below.

Federal income tax brackets 2022

Single individuals

  • 10% – on earnings $0 – $10,275
  • 12% – on earnings $10,276 – $41,775
  • 22% – on earnings $41,776 – $89,075
  • 24% – on earnings $89,076 – $170,050
  • 32% – on earnings $170,051 – $215,950
  • 35% – on earnings $215,951 – $539,900

Married filing jointly

  • 10% – on earnings $0 – $20,550
  • 12% – on earnings $20,551 – $83,550
  • 22% – on earnings $83,551 – $178,150
  • 24% – on earnings $178,151 – $340,100
  • 32% – on earnings $340,101 – $431,900

Federal income tax brackets 2021

Single Individuals

  • 10% – up to $9,950
  • 12% – $9,951 to $40,525
  • 22% – $40,526 to $86,375
  • 24% – $86,376 to $164,925
  • 32% – $164,926 to $209,425
  • 35% – $209,426 to $523,600
  • 37% – $523,601 or more

Married filing jointly

  • 10% – Up to $19,900
  • 12% – $19,901 to $81,050
  • 22% – $81,051 to $172,750
  • 24% – $172,751 to $329,850
  • 32% – $329,851 to $418,850
  • 35% – $418,851 to $628,300
  • 37% – $628,301 or more

Earned Income Tax Credit in 2022

The earned income tax credit (EITC) is aimed at giving low- to moderate-income workers and families a tax break.

For 2022, the maximum EITC amount is $6,935. This is an increase of $207 from 2021.

However, the tax credit you receive depends on your income, filing status and how many children you have.

Retirement account contributions

Contributing to a 401k can cut your tax bill significantly, and the amount you can save has increased for 2022.

These accounts help you save for your retirement.

In 2022, the IRS has raised the contributions limit for a 401k to $20,500 – up by $1,000.

Meanwhile, workers who are older than 50 years old are eligible for an extra catch-up contribution of $6,500.

https://www.the-sun.com/money/4490094/key-tax-changes-for-2022/