The IRS has released the annual inflation adjustments for 2022 for the income tax rate tables, plus more than 56 other tax provisions. The IRS makes these cost-of-living adjustments (COLAs) each year to reflect inflation.
2022 Income Tax Brackets
For 2022, the highest income tax bracket of 37 percent applies when taxable income hits:
- $647,850 for married individuals filing jointly and surviving spouses,
- $539,900 for single individuals and heads of households,
- $323,925 for married individuals filing separately, and
- $13,450 for estates and trusts.
2022 Standard Deduction
The standard deduction for 2022 is:
- $25,900 for married individuals filing jointly and surviving spouses,
- $19,400 for heads of households, and
- $12,950 for single individuals and married individuals filing separately.
The standard deduction for a dependent is limited to the greater of:
- $1,150 or
- the sum of $400, plus the dependent’s earned income.
Individuals who are blind or at least 65 years old get an additional standard deduction of:
- $1,400 for married taxpayers and surviving spouses, or
- $1,750 for other taxpayers.
Alternative Minimum Tax (AMT) Exemption for 2022
The AMT exemption for 2022 is:
- $118,100 for married individuals filing jointly and surviving spouses,
- $75,900 for single individuals and heads of households,
- $59,050 for married individuals filing separately, and
- $26,500 for estates and trusts.
The exemption amounts phase out in 2022 when AMTI exceeds:
- $1,079,800 for married individuals filing jointly and surviving spouses,
- $539,900 for single individuals, heads of households, and married individuals filing separately, and
- $88,300 for estates and trusts.
Expensing Code Sec. 179 Property in 2022
For tax years beginning in 2022, taxpayers can expense up to $1,080,000 in section 179 property. However, this dollar limit is reduced when the cost of section 179 property placed in service during the year exceeds $2,700,000.
Estate and Gift Tax Adjustments for 2022
The following inflation adjustments apply to federal estate and gift taxes in 2022:
- the gift tax exclusion is $16,000 per donee, or $164,000 for gifts to spouses who are not U.S. citizens;
- the federal estate tax exclusion is $12,060,000; and
- the maximum reduction for real property under the special valuation method is $1,230,000.
2022 Inflation Adjustments for Other Tax Items
The maximum foreign earned income exclusion amount in 2022 is $112,000.
The IRS also provided inflation-adjusted amounts for the:
- adoption credit,
- lifetime learning credit,
- earned income credit,
- excludable interest on U.S. savings bonds used for education,
- various penalties, and
- many other provisions.
Effective Date of 2022 Adjustments
These inflation adjustments generally apply to tax years beginning in 2022, so they affect most returns that will be filed in 2023. However, some specified figures apply to transactions or events in calendar year 2022.