The Internal Revenue Service just announced the tax year 2022 annual inflation adjustments for more than 60 tax provisions, including income tax brackets.
The new inflation adjustments are for tax year 2022, for which taxpayers will file tax returns in early 2023. Note that this article is for informational purposes only and does not answer specific questions about your tax situation or assist you in the tax filing process. If you have any questions, please reach out to our in-house tax service team, Prestige Wealth Accounting Group.
2022 Federal Income Tax Brackets and Rates.
In 2022, the income limits for all tax brackets and all filers will be adjusted for inflation and will be as follows (Table 1). There are seven federal income tax rates in 2022: 10 percent, 12 percent, 22 percent, 24 percent, 32 percent, 35 percent, and 37 percent. The top marginal income tax rate of 37 percent will hit taxpayers with taxable income above $539,900 for single filers and above $647,850 for married couples filing jointly.
2022 Standard Deduction and Personal Exemption
The standard deduction will increase by $400 for single filers and by $800 for joint filers (Table 2).
The personal exemption for 2022 remains at $0 (eliminating the personal exemption was part of the Tax Cuts and Jobs Act of 2017).
2022 Capital Gains Tax Rates & Brackets (Long-term Capital Gains)
Long-term Capital gains are taxed using different brackets and rates than ordinary income. Here are the 2022 Capital Gains Tax Brackets:
2022 Annual Exclusion for Gifts
In 2022, the first $16,000 of gifts to any person are excluded from tax, up from $15,000. The exclusion is increased to $164,000 from $159,000 for gifts to spouses who are not citizens of the United States.
For a full details about these annual adjustments and others, please see REVENUE PROCEDURE 2021-45.
If you have any questions, please reach out to our in-house accounting team, Prestige Wealth Accounting Group to discuss.