• Tax bracket threshold amounts set to have a large increase
  • Deductions are also predicted to get a large bump up

There have been many implications on the US economy while it’s been recovering from the lasting effects of COVID. One of these is the high amount of inflation experienced by individuals and businesses, which is predicted to have effects on next year’s tax brackets.

Typical Inflation Adjustments

Every year the IRS will make adjustments to things such as standard deductions, tax credits, and tax brackets to account for the changes in the cost of living. These changes do not affect the rates that brackets are taxed at, however it may affect which bracket entities find themselves within.

With this being said, Bloomberg’s 2022 Projected U.S. Tax Rates report expects the threshold dollar amounts for tax brackets to increase by about 3%. This rise is much steeper than what has been seen in previous years; with last year’s average increase being 0.95%.

Comparison of Tax Brackets

Married Filing Jointly
RateCurrent BracketProjected 2022 Bracket
10%$0 to $19,750$0 to $20,550
12%$19,751 to $80,250$20,550 to $83,550
22%$80,251 to $171,050$83,550 to $178,150
24%$171,051 to $326,600$178,150 to $340,100
32%$326,601 to $414,701$340,100 to $431,900
35%$414,701 to $622,050$431,900 to $647,850
37%$622,051 or more$647,850 or more
Single Filers
RateCurrent BracketProjected 2022 Bracket
10%$0 to $9,875$0 to $10,275
12%$9,876 to $40,125$10,275 to $41,775
22%$40,126 to $85,525$41,775 to $89,075
24%$85,526 to $163,300$89,075 to $170,050
32%$163,301 to $207,350$170,050 to $215,950
35%$207,351 to $518,400$215,950 to $539,900
37%$518,401 or more$539,900 or more

Standard Deduction Increases

Filing StatusCurrent DeductionProjected 2022 Deduction
Married Filing Jointly$0 to $19,750$0 to $20,550
Head of Household$19,751 to $80,250$20,550 to $83,550
Single Individual$80,251 to $171,050$83,550 to $178,150

Wrap Up

The projected increases to both the threshold dollar amount of tax brackets and standard deductions may mean some restructuring to your 2022 tax plan is in order. While these numbers are still only projected, they allow for some planning to be done before the IRS releases its official 2022 inflation-adjusted amounts later this year.

Tom Long
Associate, Creative Solutions

516-541-6549 | Email

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