A lot can change in a year—that’s why it’s important to review your financial situation every tax season.
That’s especially true during times of inflation and significant legislative change, such as pandemic assistance coming and going.
Read on for an overview of what’s new, what’s changed, and what you can do to save on your 2022 taxes. You may want to consult a CPA or tax professional for personalized advice.1
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Deadline for filing 2022 taxes: April 18, 2023 |
1. Federal tax brackets for tax year 2022
Know where you fall in the 2022 federal tax bracket, especially if you’ve had a change in salary in the last year.
| Income tax rates2 | Single | Married filing jointly |
|---|---|---|
| 10% | $0 to $10,275 | $0 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% | $539,901+ | $647,851+ |
Planning ahead for next year’s taxes? Get our 2023 tax guide (PDF).
2. Standard 2022 tax deductions
These amounts have increased for inflation to $12,950 for single filers, $19,400 for head-of-household filers, and $25,900 for married couples filing jointly.
2022 standard deductions2
$12,950
single filers
$19,400
heads of household
$25,900
married couples
Learn more about credits and deductions for individuals.
3. Child tax credits
In tax year 2021, the child tax credit was temporarily increased and distributed monthly. This time around, it’s back to pre-pandemic levels, maxing out at $2,000.3 The Child and Dependent Care Credit is also back down, maxing out at $2,100.
Keep in mind, restrictions apply; get all the details on eligibility.
4. Changes in this year’s tax withholdings
The IRS recommends checking your tax withholding every year or when a big life event happens. If you got a second job, changed jobs, or your spouse changed jobs this year, you may want to reevaluate your withholdings, which can impact your tax refund or taxes due. And after you’ve reviewed your withholdings, it may help to reevaluate your retirement contributions.
5. Elimination of personal exemptions
Just a reminder: This exemption was eliminated in the 2017 tax reform bill in favor of increasing the standard deduction. (See No. 2 above.)
6. State and local tax deduction limitations
If you itemize deductions, you can take a $10,000 maximum deduction—$5,000 if married filing separately (MFS)—on any combination of state and local income, real estate, and personal property taxes. Alternatively, you may elect to substitute state and local sales taxes for income taxes, but you can’t use both.4
7. Mortgage interest deduction limit
The 2017 tax bill set a cap on the total amount of mortgage debt for which you can deduct mortgage interest paid: up to $750,000 ($375,000 if MFS) if you take out a new loan for a first or second home between December 15, 2017, and December 31, 2025. If the tax act isn’t extended, the cap will revert to total mortgage debt of $1,000,000 ($500,000 if MFS).
If you already have a mortgage, your debt is grandfathered, and you can refinance without losing the $1,000,000 cap, if you don’t increase the debt by refinancing. However, if you have a grandfathered mortgage and acquire a second home, the new cap will apply to limit the second home mortgage to the $750,000, less the grandfathered mortgage up to $750,000.
New mortgage interest deduction cap
Grandfathered mortgage
second home and/or purchase of a new home
$750,000
Interest from home equity loans is no longer deductible, regardless of when you took out the loan.
8. Exclusion for sale of your primary home
If you decide to sell your primary residence, and you’ve lived there for two of the last five years, single filers can still exclude up to $250,000 (married couples up to $500,000) from capital gains taxes—a tax levied on profits you make when you sell for a price higher than what you originally paid, plus the cost of upgrades other than simple maintenance and repairs.5
9. Alternative minimum tax (AMT)
For tax year 2022, AMT increased to $75,900 for single or head of household filers (beginning to phase out at $539,900), and $118,100 for married filing jointly or widow(er)s (beginning to phase out at $1,079,900).2
10. Estate tax exemption
In 2022, the amount of money exempt from the estate tax increased to just over $12 million.2
Since only 0.2% of all estates are large enough to be hit by estate taxes, this only applies to a small number of people.
Next steps
Could you put more away in your retirement account to help reduce your taxable income? Log in to your account and adjust your contributions. First time logging in? Get started by creating an account.
