2022 Tax Rates & Inflation Adjustments

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Income Tax Planning

The IRS released Revenue Procedure 2021-45 (PDF) and Notice 2021-61 (PDF), which detail the tax changes, inflation and cost of living adjustments for 2022.

Below, we’ve summarized a few which we feel will have the broadest impact. Download our 2022 Tax Reference Guide for a more comprehensive overview and reminder of other limits which may impact your planning. The values reflected in this article are as of the November 10, 2021, release date. Any additional changes introduced after this date will be reflected here so you can be sure you have the most current information.

One adjustment that we have not highlighted in the past is the cost-of-living adjustment (COLA) for Social Security benefits. Due to the higher-than-normal inflation rate for 2021, the Social Security benefits COLA for 2022 is 5.9%. This represents the single largest adjustment for Social Security benefits since 1982.

STANDARD DEDUCTION
	2021	2022	Change
Married Filing Jointly¹	$25,100	$25,900	$800
Single² and Married Filing Separately¹	$12,550	$12,950	$400
Head of Household²	$18,800	$19,400	$600

¹A married filer who is blind or over age 65 can claim an additional $1,400. Two married filers who are both over age 65 or blind can claim $2,800, up $100 from 2021.
²Single or head of household filers who are blind or over age 65 can claim an additional $1,750 standard deduction, up $50 from 2021.

ESTATE & GIFT TAX
	2021	2022	Change
Annual Exclusion Gifts	$15,000	$16,000	$1,000
Estate and Gift Tax Basic Exclusion	$11,700,000	$12,060,000	$360,000
Generation Skipping Exemption	$11,700,000	$12,060,000	$360,000

OTHER ADJUSTMENTS
	2021	2022	Change
Long Term Capital Gains Rate Brackets (Married Filing Jointly)	0% – up to $80,000	0% – up to $83,350	0% – $3,350
	15% – up to $501,600	15% – up to $517,200	15% – $15,600
	20% – $501,601 and above	20% – $517,201 and above
Unearned Income Subject to Kiddie Tax	Above $1,100	Above $1,150	$50
Health/Medical Savings Account Contribution Limit	$3,600 (self only)	$3,650 (self only)	$50 (self only)
Health/Medical Savings Account Contribution Limit	$7,200 (family)	$7,300 (family)	$100 (family)
Cafeteria plans (Flexible Spending Account) Maximum Contributions	$2,750	$2,850	$100
Adoption Credit for Qualified Expenses (phased out based on MAGI)	$14,440	$14,890	$450
Foreign Earned Income Exclusion	$108,700	$112,000	$3,300
Qualified Business Income (Section 199A) Deduction Threshold	$329,800 married filing jointly	$340,100 married filing jointly	$10,300

FEDERAL INCOME TAX RATE SCHEDULES
MARRIED FILING JOINTLY & SURVIVING SPOUSES
	2022	2022 Tax is This Amount Plus this Percentage	Of the Amount Over
10%	Income up to $20,550	$0 plus 10%	$0
12%	$20,551 to $83,550	$2,055 plus 12%	$20,550
22%	$83,551 to $178,150	$9,615 plus 22%	$83,550
24%	$178,151 to $340,100	$30,427 plus 24%	$178,150
32%	$340,101 to $431,900	$69,295 plus 32%	$340,100
35%	$431,901 to $647,850	$98,671 plus 35%	$431,900
37%	Income over $647,850	$174,253.50 plus 37%	$647,850

FEDERAL INCOME TAX RATE SCHEDULES
SINGLE TAXPAYERS
	2022	2022 Tax is This Amount Plus this Percentage	Of the Amount Over
10%	Income up to $10,275	$0 plus 10%	$0
12%	$10,276 to $41,775	$1,028 plus 12%	$10,275
22%	$41,776 to $89,075	$4,808 plus 22%	$41,775
24%	$89,076 to $170,050	$15,214 plus 24%	$89,075
32%	$170,051 to $215,950	$34,648 plus 32%	$170,050
35%	$215,951 to $539,900	$49,336 plus 35%	$215,950
37%	Income over $539,901	$162,718 plus 37%	$539,900

For 2022, there is no change to the contribution limits for Traditional IRAs, Roth IRAs, and IRA and Elective Deferral Plan catch-up contributions. However, there is an increase for contributions to Elective Deferral Plans. Adjustments were also made to the AGI Phase-Outs for Roth contributions and deductible IRA contributions. The current limits and Phase-Outs are listed below for reference:

CONTRIBUTION LIMITS¹
Traditional and Roth IRA (no change from 2021)	$6,000
IRA Catch-up Limit2 (no change from 2021)	$1,000
Elective Deferral Plans^2,3	$20,500
Elective Deferral Plan Catch-up Limit² (no change from 2021)	$6,500

¹ Check with your advisor for the limits applicable to SEP, SIMPLE, and defined contribution plans.
² Catch-up contributions are available for anyone over age 50
³ Elective deferral plans include 401(k) plans, 403(b) plans, most 457 plans, and Thrift Savings plans

AGI PHASE-OUT
ROTH IRA CONTRIBUTIONS
Single/Head of Household	$129,000 to $144,000
Married Filing Joint	$204,000 to $214,000

AGI PHASE-OUT
DEDUCTIBLE IRA CONTRIBUTIONS
Single/Head of Household	$68,000 to $78,000
Married Filing Separate* (no change from 2021)	$0 to $10,000
Married Filing Joint (active spouse)	$109,000 to $129,000
Married Filing Joint (non-active spouse)	$204,000 to $214,000

There are many other cost-of-living adjustments for 2022 which may impact you. Review Revenue Procedure 2021-45 (PDF) and Notice 2021-61 (PDF) and consult your CPA to see if there are others you need to be aware of for your specific situation.

This information is believed to be accurate but should not be used as specific investment or tax advice. You should always consult your tax professional or other advisors before acting on the ideas presented here.