The standard deduction for married couples filing jointly for tax year 2022 is increasing to $25,900, up $800 from the previous year. For single taxpayers and married individuals filing separately, the standard deduction is rising to $12,950 for 2022, up $400, and for heads of households, the standard deduction will be $19,400 for tax year 2022, up $600.
For tax year 2022, the top tax rate remains 37% for individual single taxpayers with incomes greater than $539,900 ($647,850 for married couples filing jointly). The other rates are:
35%, for incomes over $215,950 ($431,900 for married couples filing jointly);
32% for incomes over $170,050 ($340,100 for MFJ);
24% for incomes over $89,075 ($178,150 for MFJ);
22% for incomes over $41,775 ($83,550 for MFJ); and
12% for incomes over $10,275 ($20,550 for MFJ).
The lowest rate is 10% for incomes of single individuals with incomes of $10,275 or less ($20,550 for married couples filing jointly).
Other highlights for changed amounts for 2022:
Earned Income Tax Credit amount is $6,935 for qualifying taxpayers who have three or more qualifying children, up from $6,728 for tax year 2021. The revenue procedure contains a table providing maximum EITC amount for other categories, income thresholds and phase-outs.
Unearned income of minor children ("kiddie tax"): the amount used to reduce the child's net unearned income is $1,150.
Maximum capital gains 0% rate: $83,350 taxable income for married couples filing jointly, $41,675 for single taxpayers and married individuals filing separately, $55,800 for heads of household, and $2,800 for an estate or trust.
Maximum capital gains 15% rate: $517,200 for joint returns or surviving spouses, $258,600 for married individuals filing a separate return, $488,500 for heads of household, $459,750 for all other individuals, and $13,700 for an estate or trust.
Alternative minimum tax exemption amounts: $118,100 for joint returns or surviving spouses, $75,900 for single individuals, $59,050 for married individuals, and $26,500 for estates and trusts.
Certain expenses of elementary and secondary schoolteachers: The maximum deduction is $300.
Cafeteria plans: The dollar limitation for voluntary employee salary reductions for contributions to health flexible spending arrangements is $2,850.
Deduction for qualified business income: The threshold amount is $340,100 for married couples filing jointly, $170,050 for married individuals filing separately, and $170,050 for all others. The phase-in range amount is $440,100 for married couples filing jointly, $220,050 for married individuals filing separately, and $220,050 for all others
Interest on education loans: Phases out with modified adjusted gross income (MAGI) exceeding $70,000 ($145,000 for joint returns) and is completely phased out at MAGI of $85,000 ($175,000 for joint returns).
Limitation on use of cash method of accounting: The gross receipts test of Sec. 448(c) (also applicable to several other business provisions) is met if average annual gross receipts for the three-tax-year period ending with the 2022 tax year do not exceed $27,000,000.
Foreign earned income exclusion: The exclusion amount is $112,000 up from $108,700 for 2021.
Unified credit against estate tax: The basic exclusion amount for decedents dying in 2022 is $12,060,000.
Annual exclusion for gifts: The first $16,000 of gifts to any person are not included in total taxable gifts under Sec. 2503 made during 2022.
It is important to understand how all these changes could potentially impact your tax preparation for 2022. Don't hesitate to call if you have any questions about this topic and others. Also, make sure to follow us on social media for more tax and accounting tips!
