The IRS released the new federal marginal tax rates and income brackets for 2022 on Nov. 10, 2021. While the tax income tax rates aren't changing, income limits have been adjusted. What are the federal income tax rates for 2022?
The U.S. tax code is progressive, which means that with higher income, your tax rates increase. Your tax brackets depend on factors such as your total income, filing status, dependents, deductions, and credits.
Inflation and higher tax brackets for 2022
Due to rising inflation, people are tightening their budgets. The 2022 income tax brackets seek to soothe this pain a bit, offering a larger standard deduction and higher tax brackets. The changes should mean that taxpayers with the same or even slightly higher taxable income in 2022 compared with 2021 will remain in a lower tax bracket.
The tax brackets for 2022
The 2022 tax brackets will apply to the tax return you'll submit in 2023. For single filers, the income tax brackets are as follows:
|up to $10,275||10 percent|
|$10,276 to $41,775||12 percent|
|$41,776 to $89,075||22 percent|
|$89,076 to $170,050||24 percent|
|$170,051 to $215,950||32 percent|
|$215,951 to $539,900||35 percent|
|over $539,900||37 percent|
The tax brackets for married couples filing jointly are as follows:
|up to $20,550||10 percent|
|$20,551 to $83,550||12 percent|
|$83,551 to $178,150||22 percent|
|$178,151 to $340,100||24 percent|
|$340,101 to $431,900||32 percent|
|$431,901 to $647,850||35 percent|
|over $647,850||37 percent|
These tax brackets apply to taxable income after standard deductions (or itemized deductions) and other tax breaks have been factored in.
Standard deduction in 2022
The standard deduction for 2022 has been raised to:
- $25,900 for married couples filing jointly.
- $12,950 for single taxpayers and married couples filing separately.
Another significant change is the exclusion for gifts, which has been raised from $15,000 in 2021 to $16,000 in 2022.
The Alternative Minimum Tax exemption amount for 2022 has been revised to $75,900, and begins to phase out at $539,900. The 2021 exemption amount was $73,600 and it began to phase out at $523,600
New 401 (k) contribution limits for 2022
Another way to reduce your tax liabilities is to contribute to a 401(k). Previously, employees were allowed a $19,500 contribution maximum, and the IRS has raised that limit to $20,500.The maximum contribution between employee and employer has increased to $61,000 per year. For taxpayers who are 50 years or older, an additional $6,500 catchup contribution is allowed, bringing the total to $67,500 for 2022.
The IRA and Roth contribution limits, on the other hand, will remain the same. For 2022, the IRA contribution limit is $6,000, and the IRA catchup contribution limit will remain $1,000 for those age 50 and above.