Taxpayers will want to read up on the IRS’ annual inflation adjustments for tax year 2022. Though released last year, these rates apply to returns filed in 2023 for the 2022 tax year. More than 60 tax provisions have changed, here are some of those changes.

Tax rates

Tax RateSingleHead of HouseholdMarried Filing Jointly/ Surviving SpouseMarried Filing Separately
10%$0 to $10,274$0 to $14,650$0 to $20,549$0 to $10,275
12%$10,275 to $41,774$14,651 to $55,900$20,550 to $83,349$10,276 to $41,775
22%$41,775 to $89,074$55,901 to $89,050$83,350 to $178,149$41,776 to $89,075
24%$89,075 to $170,049$89,051 to $170,050$178,150 to $340,099$89,076 to $170,050
32%$170,050 to $215,949$170,051 to $215,950$340,100 to $431,899$170,051 to $215,950
35%$215,950 to $539,900$215,951 to $539,900$431,900 to $647,849$215,951 to $323,925
37%Over $539,900Over $539,900Over $647,850Over $332,925

Standard deduction

Single and married filing separately taxpayers- $12,950

Married filing jointly- $25,900

Heads of household- $19,400

Personal exemption

Remains at Zero (elimination of personal exemption was a TCJA provision)

Itemized deductions

No limitation or phase-out on the total amount of itemized deductions (eliminated by TCJA). However, the state and local tax deduction is still limited to $10,000.

AMT Exemption Amounts

Individuals- $75,900 (begins to phase out at $539,900)

Married filing jointly & surviving spouses- $118,100 (begins to phase out at $1,079,800)

Married filing separately- $59,050

Trusts & estates- $26,500

Earned income tax credit

Maximum credit allowed is $560 if taxpayer has no qualifying children, $3,733 if there is one qualifying child, $6,164 for two qualifying children and $6,935 for three or more.

Qualified transportation fringe benefit

This remains $280 (monthly limitation each for qualified parking, commuter highway vehicle and any transit pass).

Contributions to health flexible spending arrangements

The dollar limitation for employee salary reductions for contributions to health FSAs remains $3,050.

Health Savings Account (HSA) contribution limits

The HSA contribution limits for 2022 is $3,650 for self-only coverage and $7,300 for family coverage. Those 55 and older can contribute an additional $1,000 as a catch-up contribution.

The HSA contribution limits increase to $3,850 for self-only coverage and $7,750 for family coverage in 2023. Those 55 and older can contribute an additional $1,000 as a catch-up contribution.

You must be enrolled in an HSA-eligible health plan to be eligible for an HSA. This means that:

  • Your health plan must have an annual deductible of at least $1,400 for self-only coverage and $2,800 for family coverage
  • Your health plan’s out-of-pocket maximum does not exceed $7,050 for self-only coverage and $14,100 for family coverage

Lifetime learning credit

The adjusted gross income amount used by joint filers to assess the reduction in the lifetime learning credit is not adjusted for inflation for taxable years beginning after December 31, 2020. The credit is phased out for taxpayers with MAGI in excess of $80,000 ($160,000 for joint returns).

Foreign earned income exclusion

$112,000

Estates of decedents

Estates of decedents who passed away in 2022 have a basic exclusion amount of $12,060,000 and $12.92 million in 2023.

Annual exclusion for gifts

This has increased to $16,000 for 2022 and $17,000 for 2023.

Adoptions

The maximum credit for adoptions in 2022 is $14,890.

Don’t forget to check out our 2022 Year End Tax Planning Guide for Individuals.

Questions? Contact us.