7 Important Inflation-Based Tax Changes to Know for 2022
GK Tax and Accounting
1. The standard deduction for married couples filing jointly rises to $25,900, up $800, from 2021. For single taxpayers and married individuals filing separately, the standard deduction rises to $12,950, up $400, and for heads of households, the standard deduction will be $19,400 for tax year 2022, up $600.
2. The top marginal rate remains the same as 2021 at 37% for individual single taxpayers with incomes greater than $539,900; for married couples filing jointly, the income amount starts at $647,850.
3. The Alternative Minimum Tax exemption amount for tax year 2022 for single taxpayers increases to $75,900 and begins to phase out at $539,900 (previously $73,600 and $523,600 respectively). For married couples filing jointly, the exemption amount rises to $118,100 and begins to phase out at $1,079,800 (previously $114,600 and $1,047,200 respectively).
4. The contribution limits for employees who participate in 401(k)s in 2022 is increased to $20,500, up from $19,500 in 2021.
5. The annual exclusion for gifts increases to $16,000 for calendar year 2022, up from $15,000 for calendar year 2021.
6. The lifetime exemption amount for estates of decedents who die during 2022 increases to $12,060,000, up $360,000 from decedents who passed away in 2021. Note that California does not currently have an estate tax.
7. The limit on annual contributions to an IRA remains unchanged at $6,000. The IRA catch-up contribution limit for individuals aged 50 and over is not subject to an annual cost-of-living adjustment and remains $1,000.