IMPORTANT TAX DATES FOR 2023

2022 Income Tax Brackets and Rates

2022 income limits for all tax brackets and all filers, adjusted for inflation. Seven federal income tax rates in 2022 are as follows: 10 percent, 12 percent, 22 percent, 24 percent, 32 percent, 35 percent, and 37 percent. The marginal income tax rate of 37 percent will only apply to taxpayers with taxable income above $539,900 (single filers), and $647,850 is the target for married couples filing jointly.

Table 1. Tax Brackets and Rates, 2022 (Source: IRS)

Standard Deduction and Personal Exemption

Standard deductions for single filers has increased by $400; $800 for married couples filing jointly. The personal exemption for 2022 remains eliminated (this is due to the personal exemption from the Tax Cuts and Jobs Act 2017 )

Table 2. 2022 Standard Deduction and Personal Exemption (Source: IRS)

Alternative Minimum Tax

Created in the 1960s, The Alternative Minimum Tax (AMT) was setup to prevent high-income taxpayers from avoiding the individual income tax. This parallel tax income system requires high-income taxpayers to calculate their tax bill twice: once under the ordinary income tax system and again under the AMT. The taxpayer then needs to pay the higher of the two. More information can be found at IRS.Gov (SEE Table 3).

Table 3. 2022 Alternative Minimum Tax Exemptions (Source:IRS)

In 2022, the 28% AMT rate applies to excess AMTI of $206,100 for all taxpayers ($103,050 for married couples filing separate returns).

AMT exemptions phase out at 25 cents per dollar earned once taxpayer AMTI hits a certain threshold. In 2022, the exemption will start phasing out at $539,900 in AMTI for single filers and $1,079,800 for married taxpayers filing jointly (SEE Table 4).

Table 4. 2022 Alternative Minimum Tax Exemption Phaseout Thresholds

Earned Income Tax Credit

The 2022 Maximum Earned Income Tax Credit (EITC) for single and joint filers is $560 (no children) (SEE Table 5). The maximum credit is $3,733 for one child, $6,164 for two children, and $6,935 for three or more children. These are small increases compared to 2021.

Table 5. 2022 Earned Income Tax Credit Parameters

Qualified Business Income Deduction

The Tax Cuts and Jobs Act includes a 20 percent deduction in 2022 for pass-through businesses with $170,050 of qualified business income for single taxpayers and $340,100 for married taxpayers filing jointly (SEE Table 6).

Table 6. 2022 Qualified Business Income Deduction Thresholds (Source:IRS)

2022 Capital Gains Tax Rates & Brackets (Long-term Capital Gains)

Capital Gains, long term, are taxed using different rates and brackets compared to standard income.

Table 7. 2022 Capital Gains Tax Rates & Brackets (Source:IRS)

 

Unmarried Individuals - Taxable Income Over

Married Individuals Filing Joint Returns - Taxable Income Over

Heads of Households - Taxable Income Over

0%

Up to $0

Up to $0

Up to $0

15%

$41,675

$83,350

$55,800

20%

$459,750

$517,200

$488,500

Child Tax Credit

The maximum Child Tax Credit for 2022 is $2,000 per child who qualifies, and is not adjusted for inflation. The portion refundable for the Child Tax Credit is adjusted for inflation and will increase from $1,400 to $1,500 in 2022.

2022 Annual Exclusion for Gifts

For 2022, the first $16,000 of gifts to any person is excluded from tax, up from $15,000 in 2021. This exclusion is increased to $164,000 from $159,000 for gifts to spouses who are not citizens of the United States.