At the end of last year, the IRS announced its latest set of tax inflation adjustments for 2022. It is very important that both individual taxpayers and businesses familiarize themselves with these changes so that they can make the necessary provisions for their tax filing and payments in the coming year. Here is a brief look at the most important adjustments.
Adjusted tax rates for 2022
Among the most important new provisions for the new tax year are the following:
- The standard deduction for married couples filing jointly has risen by $800 from $25,100 to $25,900.
- The standard deduction for individual taxpayers has risen to $12,950 (up $400)
- The maximum Earned Income Credit has also risen. It now stands at $6,935—a $207 rise from the previous year.
- As of 2022, the dollar limitation for employee salary reductions for health flexible spending arrangements increases to $2,850.
- The foreign earned income exclusion is $112,000, as opposed to $108,700 in 2021.
- Deceased estates (for people who pass away during 2022) have a basic exclusion amount of $12,060,000, up from a total of $11,700,000 for estates of decedents who died in 2021.
- The annual exclusion for gifts increases to $16,000 for 2022, up from $15,000 for 2021.
It is advisable to get the assistance of an experienced certified public accountant (CPA) to help you manage your taxes in 2022. CPAs always have a complete grasp of the new tax limits, rates and regulations, and will know exactly how to apply them to your income and tax requirements. Georgen Scarborough is a firm of CPAs based in Vienna, Virginia. Contact us if you need help managing the tax inflation adjustments for 2022.