Tax Brackets Will be Higher in 2022 Due to Surging Inflation, IRS says
The IRS on Wednesday announced 2022 inflation adjustments for a slew of different tax provisions, including federal income brackets and the standard deduction, that reflect a months-long surge in consumer prices.
Because of a spike in the cost of most consumer goods, the majority of the tax bracket thresholds are rising at a faster pace than is usual, the IRS said.
Most tax bracket cut-off points rose about 3% compared to the 2021 filing season due to a recent inflation surge, marking the largest increase in four years. The changes will apply to 2022 tax returns that are filed in 2023.
The IRS releases inflation adjustments for tax provisions on an annual basis, although the calculation is based on a different measurement than the Labor Department's consumer price index gauge (which revealed on Wednesday morning that prices climbed 6.2% in October, the highest level since December 1990).
These are the new federal income tax brackets in 2022:
For Single Individuals:
10%: Taxable income up to $10,275
12%: Taxable income between $10,275 and $41,775
22%: Taxable income between $41,775 to $89,075
24%: Taxable income between $89,075 to $170,050
32%: Taxable income between $170,050 to $215,950
35%: Taxable income between $215,950 to $539,900
37%: Taxable income over $539,900
For Married Individuals Filing Jointly:
10%: Taxable income up to $20,550
12%: Taxable income between $20,550 to $83,550
22%: Taxable income between $83,550 to $178,150
24%: Taxable income between $178,150 to $340,100
32%: Taxable income between $340,100 to $431,900
35%: Taxable income between $431,900 to $647,850
37%: Taxable income over $647,850
The standard deduction – which is claimed by the majority of taxpayers – will rise to $25,900, up from $25,100, in 2022 for married couples filing jointly. For individuals, the new maximum will be $12,950 for 2022, up from $12,550, the IRS said.
The maximum amount that can be set aside in a health care flexible spending account will be $2,850, up from $2,750.