As 2022 approaches (the 2021 tax year), we’re breaking down this year’s coming annual inflation adjustments and more than 60 tax provisions as detailed in Revenue Procedure 2020-45. In addition to this IRS released The Consolidated Appropriation Act for 2020 which increased the amount of the minimum additional tax for failure to file a return within 60 days of the filing due date. The amounts for this penalty will be either $435 or 100% of the amount due, whichever is less.

Top Changes Made

Standard Deduction Increase
The standard deduction has been increased for all filing types this coming tax year with:
  • Married couples filing jointly at $25,100 – a $300 increase from last year;
  • Single Taxpayers & married individuals filing separately rose to $12,550 – a $150 increase from last year;
  • And head of households rose to $18,800 for 2021 – another $150 increase from last year
Marginal Rate
For this upcoming tax year, the tax rates will remain the same at 37%, 35%, 32%, 24%, 22%, 12% & 10%, however, the dollar amounts to be included within these have increased as follows:
Tax Rate Filing Status Taxable Income Bracket
10%
  • Single = $0 to $9,950
  • Married Filing Jointly = $0 to $19,900
  • Head of Household = $0 to $14,200
  • Married Filing Separately = $0 to $9,950
12%
  • Single = $9,951 to $40,525
  • Married Filing Jointly = $19,901 to $81,050
  • Head of Household = $14,201 to $54,200
  • Married Filing Separately = $9,951 to $40,525
22%
  • Single = $40,526 to $86,375
  • Married Filing Jointly = $81,051 to $172,750
  • Head of Household = $54,201 to $86,350
  • Married Filing Separately = $40,526 to $86,375
24%
  • Single = $86,376 to $164,925
  • Married Filing Jointly = $172,751 to $329,850
  • Head of Household = $86,351 to $164,900
  • Married Filing Separately = $86,376 to $164,925
32%
  • Single = $164,926 to $209,425
  • Married Filing Jointly = $329,851 to $418,850
  • Head of Household = $164,901 to $209,400
  • Married Filing Separately = $164,926 to $209,425
35%
  • Single = $209,426 to $523,600
  • Married Filing Jointly = $418,851 to $628,300
  • Head of Household = $209,401 to $523,600
  • Married Filing Separately = $209,426 to $314,150
37%
  • Single = $523,601 or more
  • Married Filing Jointly = $628,301 or more
  • Head of Household = $523,601 or more
  • Married Filing Separately = $314,151 or more
Alternative Minimum Tax

For this upcoming year, the Alternative Minimum Tax amount is $73,600 and begins to phase-out at $523,600 for single filers ($114,600 with a phase-out beginning at $1,047,200for married couples filing jointly). This is an increase from 2020 which had the exemption amount begin at $72,900 with a phase-out at $518,400 ($113,400 with a phase-out at $1,036,800 for married couples filing jointly).

Earned Income Tax Credit

For this upcoming tax year, the maximum Earned Income Credit amount is $6,728 for qualifying taxpayers who have three or more qualifying children, up from a total of $6,600 in the tax year 2020. The revenue procedure contains a table providing the maximum Earned Income Credit amount for other categories, income thresholds, and phase-outs.

How will this affect me this coming year? For a better understanding feel free to give us a call at 516-541-6549.

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