Filing taxes for 2022 is currently underway; the deadline is April 18, 2023 for most people. And, like in previous years, there are some new tax changes to keep track of, such as inflation adjustments. Here's a rundown of issues to keep in mind as you prepare to file your 2022 tax return.
- The deadline for filing your 2022 tax return is April 18, 2023.
- The standard deduction for married filing jointly taxpayers is $25,900 for the 2022 tax year. For single filers (and married filing separately) it's $12,950.
- There are still seven marginal tax rates, with higher income bracket limits in 2022 to account for inflation.
- Estates of people who die during 2022 have a basic exemption amount of $12.06 million, up from $11.7 million from the previous year.
Tax Brackets and Marginal Rates
Like the past several years, there are seven marginal tax rates at the federal level: 10%, 12%, 22%, 24%, 32%, 35%, and 37%; however, the income thresholds increased from 2021 to 2022. Here's a rundown of tax brackets for 2022, due in 2023:
|2022 Tax Brackets and Rates|
|2022 Tax Rate||Single Filers||Married Filing Jointly||Heads of Household|
|10%||$0 to $10,275||$0 to $20,550||$0 to $14,650|
|12%||$10,275 to $41,775||$20,550 to $83,550||$14,650 to $55,900|
|22%||$41,775 to $89,075||$83,550 to $178,150||$55,900 to $89,050|
|24%||$89,075 to $170,050||$178,150 to $340,100||$89,050 to $170,050|
|32%||$170,050 to $215,950||$340,100 to $431,900||$170,050 to $215,950|
|35%||$215,950 to $539,900||$431,900 to $647,850||$215,950 to $539,900|
|37%||$539,900 or more||$647,850 or more||$539,900 or more|
The standard deduction is the portion of your income that's not subject to income tax. You can take the standard deduction unless you itemize deductions on Form 1040 Schedule A. The Tax Cuts and Jobs Act (TCJA) of 2017 nearly doubled the standard deduction for 2018; these changes expire after 2025.
Here are the standard deduction amounts by filing status for the 2022 tax year:
|Standard Deductions 2022|
|Filing Status||2022 Standard Deduction|
|Married Filing Separately||$12,950|
|Heads of Household||$19,400|
|Married Filing Jointly||$25,900|
For most filers, it's easier to take the standard deduction; however, if the value of your itemized deductions is greater than your standard deduction, it makes sense to itemize. Not much has changed for 2022, but here's a reminder:
- State and local taxes (SALT): The combined deduction for state and local income taxes, property taxes, and real estate taxes is capped at $10,000.
- Mortgage interest deduction: You can deduct your mortgage interest on up to $750,000 of debt (the limit is $1 million if you bought the home before Dec. 16, 2017).
- Charitable donations: The cash donation limit of 60% of AGI remains in place for 2022. Note that this limit is not automatic; you must elect it on your Form 1040.
- Medical expenses: You can deduct medical expenses that exceed 7.5% of your AGI.
- Miscellaneous deductions: You can no longer deduct miscellaneous itemized deductions—unless you claim a deduction related to unreimbursed employee expenses.
Capital Gains Tax Rates
The tax treatment of long-term capital gains changed with the TCJA. Before 2018, the capital gains tax brackets closely aligned with income tax brackets; however, the TJCA created unique capital gains tax brackets:
|Long-Term Capital Gains Tax Rates for 2022|
|Filing Status||0% Rate||15% Rate||20% Rate|
|Single||Up to $41,675||$41,676 to $459,750||Over $459,750|
|Head of Household||Up to $55,800||$55,801 to $488,500||Over $488,500|
|Married Filing Jointly||Up to $83,350||$83,351 to $517,200||Over $517,200|
|Married Filing Separately||Up to $41,675||$41,676 to $258,600||Over $258,600|
Child Tax Credit
The Child Tax Credit is a tax benefit granted to American taxpayers for each qualifying dependent child. The credit amount is $2,000 per qualifying child and the maximum refundable portion of the credit is $1,500 in 2022.
Alternative Minimum Tax
The alternative minimum tax (AMT) limits certain tax breaks for higher-income taxpayers to ensure they pay at least a minimum amount of income tax. According to the Tax Foundation, "The federal AMT was created in 1963 after Congress discovered that 155 high-income taxpayers were eligible to claim so many deductions that they ended up with no federal income tax liability at all."
High-income taxpayers have to calculate their tax bill twice—once using the standard income tax system and again under the AMT—and pay the higher of the two. The AMT is levied at two rates: 26% and 28%.
Here are the AMT exemptions and phase-outs for 2022:
|AMT Limits for 2022|
|2022 Exemption||2022 Phaseout|
|Heads of Household||$75,900||$539,900|
|Married Filing Jointly||$118,100||$1,079,800|
Five states—California, Colorado, Connecticut, Iowa, and Minnesota—have an alternative minimum tax (AMT) in their individual income tax codes.
There is a limit of 60% of AGI on cash contributions for those who itemize: You can deduct donations for up to 100% of your AGI. Note: Donations to donor-advised funds and supporting organizations do not qualify.
401(k) Plan Contribution Limits
The contribution limit for employer retirement plans such as 401(k)s, 403(b)s, most 457 plans, and the federal government’s thrift savings plan (TSP) is $20,500 for 2022.
The catch-up contribution limit for employees ages 50 or older is $6,500 for 2022. The catch-up limit applies to the following plans:
For SIMPLE retirement accounts, the contribution limit is $14,000 for 2022, and a $3,000 catch-up limit applies to participants age 50 and up for both years.
IRA Contribution Limits
The annual contribution limit for traditional IRAs and Roth IRAs remains unchanged at $6,000 for 2022. There's an additional catch-up contribution of $1,000 for those over 50.
Taxpayers can deduct contributions to a traditional IRA if they meet certain conditions. During the year, if either the taxpayer or their spouse was covered by a retirement plan at work, the deduction may be reduced or phased out. If neither the taxpayer nor their spouse is covered by an employer-sponsored retirement plan, the phase-outs of the deduction do not apply.
Traditional IRA Phase-out ranges for 2022 are as follows:
- For single taxpayers covered by a workplace retirement plan, the phase-out range is $68,000 to $78,000.
- For married filing jointly, when the spouse making the IRA contribution is covered by a workplace retirement plan, the phase-out range is $109,000 to $129,000.
- For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the deduction is phased out if the couple's income is between $204,000 to $214,000.
- For a married individual filing a separate return who is covered by a workplace retirement plan, the phase-out range is not subject to an annual cost-of-living adjustment and remains $0 to $10,000 in 2022.
Roth IRA contributions are not deductible. In addition, there are income limitations on the amount you can contribute to a Roth IRA. The income phase-out range for taxpayers making contributions to a Roth IRA is $129,000 to $143,000 for singles and heads of household in 2022. For married couples filing jointly, the income phase-out range is $204,000 to $214,000.
The Saver's Credit
People with low-to-moderate incomes may qualify for the saver's credit, a dollar-for-dollar reduction of the taxes you owe. The credit is available to people who contribute to an IRA, 401(k), or any other qualified retirement account—provided their AGI falls within specific parameters.
For 2022, the income limit for the saver’s credit (also referred to as the retirement savings contributions credit) is $68,000 for married couples filing jointly, $51,000 for heads of household, and $34,000 for singles and married individuals filing separately.
Required Minimum Distributions (RMDs)
Required minimum distributions (RMDs) are back for 2022 (and beyond). Currently, you must start taking withdrawals from your IRA, SIMPLE IRA, SEP IRA, and retirement plan accounts at age 72. The withdrawal amount is based on a calculation dictated by factors like account value and longevity. The Secure 2.0 Act, signed into law in late 2022, raises the RMD starting age in two tranches: to 73, starting in 2023, and to 75, starting in 2033.
Roth IRAs have no required minimum distributions during the account owner's lifetime. If you don't need the money, you can leave it alone and let the account grow tax-free for your heirs.
Earned Income Tax Credit
The earned income tax credit (EITC) is a refundable tax credit that helps lower-income taxpayers reduce the amount of tax owed on a dollar-for-dollar basis. As a refundable tax credit, taxpayers may be eligible for a refund even if they have no tax liability for the year.
The income limits and maximum credits don't change much for 2022—unless you don't have children, in which case you'll have a harder time qualifying (and get a smaller credit if you do). Here are the EITC AGI limits and maximum credit amounts for 2022:
|EITC for 2022|
|Dependents||Single or Head of Household||Married Filing Jointly||Maximum EITC|
HSA Contribution Limits
The dollar limit for employee salary reductions for contributions to a health flexible spending account (FSA) is $2,850 for 2022.
For the tax year 2022, people who have self-only coverage in a medical savings account (MSA) must have an annual deductible that's between $2,450 and $3,700. The maximum out-of-pocket expense for self-only coverage is $4,950.
The annual deductible for participants with family coverage must be between $4,950 and $7,400 for 2022. For family coverage, the out-of-pocket expense limit is $9,050.
The IRS often extends tax filing and payment deadlines for victims of major storms and other disasters. Consult IRS disaster relief announcements to determine your eligibility.
Estate Tax Exemption and Annual Gift Exclusion
Estates of people who die during the tax year have a basic estate tax exemption amount of $12.06 million in 2022.
The annual exclusion for gifts is $16,000 for 2022.
What Is the Deadline for Filing My 2022 Tax Return?
Your 2022 tax return is due Monday, April 18, 2023. You can get an automatic six-month extension by filing Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return.
What Is the Standard Deduction for 2022?
Taxpayers can choose the standard deduction or itemize their deductions on Form 1040 Schedule A. The standard deductions for 2022 are:
- $12,950 for single and married filing separately filers
- $19,400 for heads of household
- $25,900 for married filing jointly taxpayers and surviving spouses
What Is the Estate Tax Exemption for 2022?
Most estates are too small to trigger the federal estate tax, which applies only if the assets of the decedent's estate are worth $12.06 million or more for 2022. Note that about a dozen states also levy an estate tax.
Should I Hire a Tax Preparer or Use Tax Software?
A slight majority of people in the U.S. pay a tax preparer to file their returns. Still, tax software (e.g., TurboTax) has made it easier for people to prepare and file their own returns. The decision can come down to cost: Tax software is generally cheaper than hiring a tax pro.
However, you should also consider the complexity of your return (go the pro route if you own a business, had a major life event, or want to itemize), your tax proficiency, and your schedule. In general, you'll save money but not time if you prepare your own return. If you go with a tax pro, you'll generally save time but not money. Of course, an experienced tax preparer may save you more money than you spend on their services, so that should be taken into account, too.
The Bottom Line
IRS inflation adjustments intend to keep federal taxes in line with inflation. Given that inflation started climbing in 2021 and continued climbing further in 2022 to historically high levels, particularly when compared to the last few decades, it's important to note the adjustments. It's also helpful to keep tabs on recent tax law changes—even those unrelated to inflation. Knowing the latest information can help you plan for the 2022 tax year and beyond.
Internal Revenue Service. "Tax Filing Season Begins Jan. 24; IRS Outlines Refund Timing and What To Expect in Advance of April 18 Tax Deadline."
Internal Revenue Service. "IRS Provides Tax Inflation Adjustments for Tax Year 2022."
Internal Revenue Service. "Rev. Proc. 2021-45," Pages 5-8.
Internal Revenue Service. "Publication 5307, Tax Reform Basics for Individuals and Families," Pages 1, 4.
Internal Revenue Service. "Rev. Proc. 2021-45," Page 14.
Internal Revenue Service. "Topic No. 503 Deductible Taxes."
Internal Revenue Service. "Publication 5307, Tax Reform Basics for Individuals and Families," Page 5.
Internal Revenue Service. "Topic No. 506 Charitable Contributions."
Internal Revenue Service. "Publication 5307, Tax Reform Basics for Individuals and Families," Page 6.
Internal Revenue Service. "Publication 5307, Tax Reform Basics for Individuals and Families," Page 7.
Tax Policy Center. "How Are Capital Gains Taxed?"
Internal Revenue Service. "Rev. Proc. 2021-45," Pages 8-9.
Internal Revenue Service. "What You Need to Know about CTC, ACTC and ODC."
The Tax Foundation. "Does Your State Have an Individual Alternative Minimum Tax (AMT)?"
Tax Policy Center. "What Is The AMT?"
Internal Revenue Service. "Rev. Proc. 2021-45," Page 12.
Internal Revenue Service. "Exempt Organization Types."
Internal Revenue Service. "Charitable Contribution Deductions."
Internal Revenue Service. "IRS Announces 401(k) Limit Increases to $20,500."
Internal Revenue Service. "IRS Announces Changes to Retirement Plans for 2022."
Internal Revenue Service. "IRA Deduction Limits."
Internal Revenue Service. "Retirement Savings Contributions Credit (Saver’s Credit)."
U.S. Congress. "One Hundred Seventeenth Congress of the United States of America," Page 831.
Internal Revenue Service. "Retirement Topics—Required Minimum Distributions (RMDs)."
Internal Revenue Service. "Earned Income and Earned Income Tax Credit (EITC) Tables."
Internal Revenue Service. "IRS Kicks Off 2023 Tax Filing Season With Returns Due April 18."
The Tax Foundation. "Does Your State Have an Estate or Inheritance Tax?"
Federal Reserve Bank of St. Louis. "2021: The Year of High Inflation."
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