The IRS released its annual inflation adjustments affecting the 2022 standard deduction amounts, income tax brackets, and an array of other tax code provisions. This year's adjustments are substantially larger than years past, reflecting the sharp increases in consumer prices over the past several months.
Note: The pending $1.85 trillion Build Back Better Act includes proposed tax code changes which would modify some of these provisions, so stay tuned.
The marginal income tax rates of 10%, 12%, 22%, 24%, 32%, 35% and 37% remain unchanged for 2022. The associated income brackets were increased by a little over 3% from 2021. Here is a comparison of the 2021 and 2022 brackets and percentage increase for taxpayers filing Single and Married Filing Jointly.
The standard deduction is currently utilized by almost 90% of taxpayers versus itemized deductions. The standard deduction amounts for 2022 have increased by 3.19% for taxpayers filing single, head of household, and married filing jointly. Here is a comparison of the 2021 and 2022 standard deduction amounts.
As always at Monadnock Tax Services we are happy to help individuals and families with friendly tax advice and services. Give us a call at (603) 722-0184 or email info@monadnocktax.com