Federal Income Tax Brackets

Sep 19, 2022 By Triston Martin

For tax returns that individual taxpayers submit, the highest tax rate will remain at 37% for the 2022 tax year. The standard deduction, tax bracket ranges, additional deductions, and phaseouts are all updated yearly for inflation. The top tax rate will remain at 37% for the 2022 tax year.

Federal Tax Rates and Brackets

There will be seven tax brackets for the tax year 2022, the same number as for the tax year 2021. As was just said, the highest possible tax bracket is still 37%. The Internal Revenue Service has established the following rates for the six tax brackets: 10%, 12%, 22%, 24%, 32%, and 35%.

The Standard Deductions for 2022

When filing their yearly tax returns, taxpayers can use a predetermined amount known as the standard deduction to lower the amount of income subject to taxation. The following is the deduction that the IRS has established for the year 2022:

  • $12,950 for single filers
  • For married couples filing separately, the tax is $12,950.
  • $19,400 for the primary breadwinner in a family
  • The standard deduction for married couples filing jointly is $25,900.
  • Survivor spouses are eligible for $25,900.

The extra standard deduction for a person who is old or blind is $1,400. This applies to both individuals. This sum rises to $1,750 for single people who have never been married and who do not have a living spouse in their household. Claiming a dependent entitles an individual to a standard deduction of either $1,150 or $400 in addition to that person's earned income (provided that the individual's earned income does not exceed $12,950), whichever amount is larger.

Capital Gains

The tax rate that applies to a taxpayer's regular income is higher than the one that applies to their capital gains. However, they are contingent on the taxpayer's income, subject to taxation and filing status. The standard income tax and the alternative minimum tax use the same maximum rates on capital gains adjusted for inflation. For the 2022 tax year, your rate on gains on capital will be 0%, provided that your income does not reach the following thresholds:

  • For married couples filing jointly, the standard tax rate is $83,350.
  • For married couples filing separately, the standard deduction is $41,675.
  • The head of a family will get $55,800.
  • $41,675 for single filers

When applied to adjusted net capital gains, the 15% tax rate will be applicable in 2022 for the following:

  • Returns on the joint income of up to $517,200
  • Separate tax filings for married couples, with a maximum of $258,600 allowed
  • Returns of up to $488,500 for the head of the family
  • Returns for individuals filing separately up to $459,750

Individual Tax Credits

Credit for Taxes Paid by Employers (EITC)

Adjustments for inflation to the maximum amount of the earned income tax credit (EITC) for taxpayers whose self-reported earnings. In 2022, the maximum credit available for families with three or more children is $6,935. The benefit starts to be reduced or eliminated for married couples who file their taxes jointly when their adjusted gross income reaches $26,260. (or earned income, if higher). At this point, the credit has been fully applied.

Child Tax Credit

The American Rescue Plan proposed by Vice President Joe Biden included revisions to the Child Tax Credit for 2021. It might go as high as $3,000 per kid or $3,600 for children under 6 years old. The minimum age requirement for children to qualify was also raised to 17. (from 16).

Qualified Adoption Expenses

The credit for eligible adoption expenditures and the special credit for adopting a child with special needs totals $14,890 for 2022. This credit is available to adoptive parents. The amount of money that may be excluded from a worker's taxable income for "qualified adoption expenditures" paid for or reimbursed by their employer will be raised to the same level as before.

Lifetime Learning Credit

In 2022, taxpayers who have a modified adjusted gross income (MAGI) of more than $80,000 ($160,000 for joint returns) will no longer be eligible to claim the maximum lifetime learning credit (LLC) of $2,000 per return for qualified educational expenses for themselves, their spouses, or their dependents.

Alternative Minimum Tax

Such as ordinary taxable income, to which certain tax advantages have been added back. The following are the exemption levels for the year 2022:

  • $118,100 for joint returns
  • $75,900 for those who are single and not married
  • $59,050 for each of a married couple's tax returns

Roth IRAs

The income range between $0 and $10,000 that triggers the phaseout of a Roth IRA contribution for a married individual's separate return has not changed.

Credit for Saver's

In addition to any exclusions or deductions they may be eligible for, low-income taxpayers who make contributions to retirement plans may be eligible to claim a tax credit that is not refundable.

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