Were you aware that 2022 Tax Information has been released by the IRS? Before you say, “It’s only November” consider this. “Forewarned is forearmed” (Robert Greene).
IRS Releases Income Tax Brackets for 2022
Although the tax rates haven’t changed as yet, tax brackets for 2022 have been released to account for inflation. For 2022, they’re still set at 10%, 12%, 22%, 24%, 32%, 35% and 37%. However, the tax brackets are adjusted (or “indexed”) each year to account for inflation.
Kiplinger.com describes the tax brackets well (see this link for the whole article) https://www.kiplinger.com/taxes/tax-brackets/603738/irs-releases-income-tax-brackets-for-2022 When using the tax brackets, it’s important to remember that the tax rates only apply to the income that falls within the applicable tax bracket range for your filing status (it is not a flat rate applied to total income.)
2022 Tax Brackets for Single Filers and Married Couples Filing Jointly
| Tax Rate | Taxable Income (Single) | Taxable Income (Married Filing Jointly) |
| 10% | Up to $10,275 | Up to $20,550 |
| 12% | $10,276 to $41,775 | $20,551 to $83,550 |
| 22% | $41,776 to $89,075 | $83,551 to $178,150 |
| 24% | $89,076 to $170,050 | $178,151 to $340,100 |
| 32% | $170,051 to $215,950 | $340,101 to $431,900 |
| 35% | $215,951 to $539,900 | $431,901 to $647,850 |
| 37% | Over $539,900 | Over $647,850 |
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2022 Tax Brackets for Married Couples Filing Separately and Head-of-Household Filers
| Tax Rate | Taxable Income (Married Filing Separately) | Taxable Income (Head of Household) |
| 10% | Up to $10,275 | Up to $14,650 |
| 12% | $10,276 to $41,775 | $14,651 to $55,900 |
| 22% | $41,776 to $89,075 | $55,901 to $89,050 |
| 24% | $89,076 to $170,050 | $89,051 to $170,050 |
| 32% | $170,051 to $215,950 | $170,051 to $215,950 |
| 35% | $215,951 to $323,925 | $215,951 to $539,900 |
| 37% | Over $332,925 | Over $539,900 |
The 2022 Capital Gains Tax Rate Thresholds Are Out
Kiplinger also released information about Capital Gains Thresholds for 2022. Here is the link to the entire article: https://www.kiplinger.com/taxes/capital-gains-tax/603735/2022-capital-gains-tax-rate-thresholds
If you sell stocks, mutual funds or other capital assets that you held for at least one year, any gain from the sale is taxed at either a 0%, 15% or 20% rate. Those tax rates for long-term capital gains are typically much lower than the ordinary tax rates you’d otherwise pay, which currently can be as high as 37%.
Which of the capital gains rates – 0%, 15% or 20% – applies to you depends on your taxable income. The higher your income, the higher the rate. The taxable income thresholds for the capital gains tax rates are adjusted each year for inflation. The IRS has already released the 2022 thresholds (see table below), so you can start planning for 2022 capital asset sales now.
2022 Capital Gains Tax Rate Thresholds
| Capital Gains Tax Rate | Taxable Income (Single) | Taxable Income (Married Filing Separate) | Taxable Income (Head of Household) | Taxable Income (Married Filing Jointly) |
| 0% | Up to $41,675 | Up to $41,675 | Up to $55,800 | Up to $83,350 |
| 15% | $41,675 to $459,750 | $41,675 to $258,600 | $55,800 to $488,500 | $83,350 to $517,200 |
| 20% | Over $459,750 | Over $258,600 | Over $488,500 | Over $517,200 |
Tax on Net Investment Income
There’s an additional 3.8% surtax on net investment income (NII) that you might have to pay on top of the capital gains tax. (NII includes, among other things, taxable interest, dividends, gains, passive rents, annuities and royalties.) You must pay the surtax if you’re a single taxpayer with modified adjusted gross income over $200,000, a married couple filing a joint return with modified AGI over $250,000, or a married person filing a separate return with modified AGI over $125,000.
Note that, under the current version of President Biden’s Build Back Better plan that’s being considered by Congress, the surtax would be expanded beginning in 2022 to cover NII derived in the ordinary course of a trade or business for single or head-of-household filer with modified AGI over $400,000, a joint filer with modified AGI over $500,000, and a married person filing a separate return with a modified AGI over $250,000. The plan would also clarify that the surtax doesn’t apply to wages on which Social Security and Medicare payroll taxes (i.e., FICA taxes) are already imposed.
2022 401(k) and IRA Contribution Limits
Also released are the 2022 401(k) and IRA Contribution Limits. For information on cost-of-living adjustments to retirement accounts, see the IRS’s release.
The contribution limit for workplace retirement accounts, including 401(k)s, 403(b)s, most 457 plans and Thrift Savings Plans, is being raised from $19,500 to $20,500.
Catch-up contributions for those accounts is not changing: Savers 50 and older can contribute an additional $6,500, bringing the total they can stash away to $27,000.
The amount workers can contribute to individual retirement accounts (IRAs) remains unchanged at $6,000. The catch-up contribution amount for those accounts will also stay at $1,000, meaning those 50 and over can put away $7,000 next year.
Additionally, the income ranges to be eligible to contribute to Roth IRAs increase next year. The new phase outs are: between $129,000 and $144,000 for singles and heads of households (up from $125,000 to $140,000), and $204,000 to $214,000 for married couples filing jointly (up from $198,000 to $208,000).
The amount individuals can contribute to a SIMPLE (savings incentive match plan for employees) retirement account will also increase, from $13,500 to $14,000.
Pay Attention to What Impacts You
This week I want to highlight this information in order for you to get thinking about planning now. 2021 ends in just over a month. Making a little time now, lessens the year-end “crunch”.
Finding ways to make it easier for you to assess what you have in place and ways to create your roadmap to protect you/yours is my passion. Beginning at age 18, we are “adulting” whether we know it or not. Educating and advocating about how to begin is where I come in.
Before life’s twists and turns impact you, your loved ones and your business, let’s talk. When you dig into the nitty gritty of your life, organize what needs to be done, and take action, it is a huge relief.
Check out my website to learn about me and what I do: https://thelivingplanner.com And, stay tuned for online courses I’ve developed (under soft launch now) for you, your families, young adults, businesses and your pets 🙂 Have questions, email me: Lynn@thelivingplanner.com
Find something to be thankful for every day –Lynn
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