IRS Issues Inflation Adjusted Amounts for 2022
IRS Issues Inflation Adjusted Amounts for 2022 – Including Higher Gift Tax Exclusions
2021 was a tumultuous year that picked up right where 2020 left off - as we continued our transition into a more virtual world. While many businesses returned to offices, flexible working is now much more ingrained in our collective work culture and likely here to stay.
Looking ahead to 2022
As it always does towards the end of the year, the IRS has delivered inflation adjusted amounts for the coming year. The 2022 amounts are reviewed below.
For purposes of this article, only amounts that have changed from 2021 to 2022 will be referenced. Items which remained the same (i.e., personal exemption for tax remains at 0) will not be shown.
Individual Brackets and Rates
|
Tax Rate |
For Single Individuals |
For Married Filing Joint & Surviving Spouse |
For Married Filing Separately |
For Heads of Household |
|
10% |
$0 - $10,274 |
$0 - $20,549 |
$0 - $10,274 |
$0 - $14,649 |
|
12% |
$10,275 - $41,774 |
$20,550 - $83,549 |
$10,275 - $41,774 |
$14,650 - $55,899 |
|
22% |
$41,775 - $89,074 |
$83,550 - $178,149 |
$41,775 - $89,074 |
$55,900 - $89,049 |
|
24% |
$89,075 - $170,049 |
$178,150 - $340,099 |
$89,075 - $170,049 |
$89,050 - $170,049 |
|
32% |
$170,050 - $215,949 |
$340,100 - $431,899 |
$170,050 - $215,949 |
$170,050 - $215,949 |
|
35% |
$215,950 - $539,899 |
$431,900 - $647,849 |
$215,950 - $323,924 |
$215,950 - $539,899 |
|
37% |
Over $539,900 |
Over $647,850 |
Over $323,925 |
Over $539,900 |
Standard Deduction Amounts
|
For Single Individuals |
For Married Filing Joint & Surviving Spouse |
For Married Filing Separately |
For Heads of Household |
|
$12,950 |
$25,900 |
$12,950 |
$19,400 |
AMT Exemption Amounts
|
For Single Individuals |
For Married Filing Joint & Surviving Spouse |
For Married Filing Separately |
For Heads of Household |
|
$75,900 |
$118,100 |
$59,050 |
$75,900 |
Capital Gains Brackets and Rates
The zero rate for lower incomes and favorable 15% rate for a broad range of incomes are still in effect
|
Tax Rate |
For Single Individuals |
For Married Filing Joint & Surviving Spouse |
For Married Filing Separately |
For Heads of Household |
|
0% |
$0 - $41,574 |
$0 - $83,349 |
$0 - $41,674 |
$0 - $55,799 |
|
15% |
$42,675 - $459,749 |
$83,350 - $517,199 |
$41,675 – 258,599 |
$55,800 - $488,499 |
|
20% |
Over $459,750 |
Over $517,200 |
Over $258,600 |
Over $488,500 |
199A / Qualified Business Income Deduction
If your taxable income exceeds the following amounts your deduction will be limited:
|
Single and Head of Household |
Married Filing Jointly |
Married Filing Separately |
|
$164,900 |
$329,800 |
$164,925 |
Kiddie Tax – The Kiddie Tax threshold is increased to $1,150 from $1,100.
Estate and Generation Skipping Tax (“GST”) – Higher lifetime exemptions remain in effect, for now, and the annual gift tax exclusion amount increases for the first time since 2018. For 2022, the Estate and GST lifetime exemption amounts have increased to $12,060,000. The annual exclusion for gifts is $16,000 in 2022 up from $15,000.
Section 179 Deduction - The amount allowable to be expensed under Code 179 will be $1,080,000 with a phaseout threshold of $2,700,000 when eligible property is placed in service.
Excess Business Loss Deduction - For 2022, the threshold for excessive business losses is now losses exceeding $540,000 (married filing jointly) and $270,000 for all other filers.
Final Thoughts - Throughout 2021, speculation ensued as to if – and to what extent - various tax proposals would become law. We landed somewhere in the middle – with a number of changes, but nothing revolutionary. Now more than ever, working closely with your tax professional is vitally important.
Herbein is here to help. Please contact your Herbein engagement team member if you have questions regarding this tax alert at info@herbein.com.
Article prepared by Sean McGuire.
