2022 Federal Income Tax Brackets, Standard Deductions, Tax Rates

There is no longer a personal exemption due to the 2017 Tax Cuts and Jobs Act. Taxpayers whose net investment income exceeds the IRS limit ($200,000 for an individual taxpayer, $250,000 married filing jointly, or $125,000 married filing separately) are subject to a 3.8% net investment income tax (NIIT) on investment income above those limits.

Standard Deduction

The standard deduction is a specific figure that taxpayers can use to reduce their taxable income when they file their annual tax returns. Note that taxable income is your adjusted gross income (AGI) less any itemized deductions or your standard deduction.

2022 Standard Deductions

The deduction set by the IRS for 2022 is:

The additional standard deduction amount for an individual who is aged or blind is set at $1,400. That amount increases to $1,750 for individuals who are unmarried and if they aren’t surviving spouses. The standard deduction for claiming a dependent is $1,150 or $400 plus the individual’s earned income (as long as it’s not over $12,950)—whichever is greater.

Capital Gains

Capital gains rates are lower than a taxpayer’s ordinary income rate. But they depend on the taxpayer’s taxable income and filing status. The maximum adjusted capital gains rates apply for both the regular income tax and the alternative minimum tax.

Your capital gains rate is 0% for the 2022 tax year provided your income does not exceed:

• $83,350 for married couples filing jointly
• $41,675 for married couples filing separately
• $55,800 for the head of a household
• $41,675 for single filers

In 2022, the 15% rate applies to adjusted net capital gains for:

• Joint returns of up to $517,200
• Married individuals’ separate returns of up to $258,600
• Head of household returns of up to $488,500
• Single individual returns of up to $459,750

The applicable capital gains rate is set at 20% for any income amounts above these ceilings.

Individual Tax Credits

Earned Income Tax Credit (EITC)

The maximum amount of the earned income tax credit (EITC) for taxpayers whose self-reported incomes were in the lowest income bracket and the taxable income levels for its thresholds and ceilings are also adjusted for inflation. The maximum credit for three or more children is $6,935 in 2022. For married couples filing jointly, the phaseout of the credit begins at $26,260 of adjusted gross income (or earned income, if higher). The credit is completed at $59,187.

No EITC is allowed if the aggregate amount of investment income, such as from interest, dividends, net capital gains, or other passive activities, exceeds $10,300 in 2022.

Child Tax Credit: Special Rules for 2021 Only

President Biden’s American Rescue Plan made changes to the Child Tax Credit for 2021. It increased to as much as $3,000 per child ($3,600 for ages 6 and younger). The age limit for qualifying children also rose to 17 (from 16). The maximum refundable portion of the child credit for each child under age 17 was limited to $1,400 per child. The credit was fully refundable for that amount in 2021. The amount for 2022 is $1,500.

The IRS was able to issue up to half of an eligible household’s credit as an advance disbursement from July through December 2021, using the previous year’s tax return to determine eligibility.

Eligible families who did not receive any advance Child Tax Credit payments can claim the full amount of the Child Tax Credit on their 2021 federal tax return. Families who received advance payments will need to file a 2021 tax return and compare the advance Child Tax Credit payments that they received in 2021 with the amount of the Child Tax Credit that they can properly claim on their 2021 tax return.

The credit is reduced to $2,000 per child if your modified adjusted gross income (MAGI) exceeds a certain limit. The limit for 2021 is:

• $150,000 for married couples filing jointly
• $112,500 for heads of household
• $75,000 for single filers

Biden’s bill also eliminated the minimum income requirement for the Child Tax Credit. Previously, families earning less than $2,500 a year were ineligible and credits were calculated based on distance from that minimum at a rate of 15 cents per child for every dollar of income above $2,500.

Qualified Adoption Expenses

The credit for qualified adoption expenses, as well as the special credit for the adoption of a child with special needs, amount to $14,890 for 2022. The exclusion from an employee’s income for qualified adoption expenses that are paid or reimbursed under an employer plan will be increased to the same level.

Lifetime Learning Credit

In 2022, the maximum $2,000 per return lifetime learning credit (LLC) for qualified educational expenses for a taxpayer, spouse, or dependent is phased out for taxpayers with MAGI in excess of $80,000 ($160,000 for joint returns).

Foreign Earned Income Exclusion

The foreign earned income exclusion is set by the IRS at $112,000 for 2022.

Alternative Minimum Tax

The alternative minimum tax (AMT) applies to alternative minimum taxable income, such as regular taxable income with certain tax benefits added back, in excess of an exemption level. 

The alternative minimum tax exemption levels for 2022 are:

• $118,100 for joint returns
• $75,900 for unmarried individuals
• $59,050 for married people’s separate returns

These alternative minimum tax exemption levels phase out, in 2022, from:

• $1,079,800 to $1,552,200 for joint returns
• $539,900 to $843,500 for unmarried individuals
• $539,900 to $776,100 for married people’s separate returns

The alternative minimum tax rate is 28% for alternative minimum taxable income up to a maximum of $206,100 (for 2022) for returns of married couples and single individuals ($103,050 in 2022, for married filing separately).

Increased Allowances: Fringe Benefits, Medical Spending Accounts, and Estates

The monthly limit for qualified transportation and qualified parking fringe benefits is set at $280 for 2022.

The maximum salary reduction for contributions to health flexible spending accounts (FSAs) is $2,850 for 2022. The maximum carryover of unused amounts for cafeteria plans is $570 for 2022.

The thresholds and ceilings for participants in medical savings accounts (MSAs) are from:

• $2,450 to $3,700 with a maximum out-of-pocket expense of $4,950 for self-coverage for 2022
• $4,950 to $7,400 with a maximum out-of-pocket expense of $9,050 for family coverage for 2022

For a decedent dying in 2021, the exemption level for the estate tax is set at $12.06 million in 2022. The annual gift tax exclusion is $16,000 for 2022.

Retirement Plans

The IRS also sets limitations on retirement plan contributions and phaseout ranges. The income exclusion for employee contributions to employer retirement plans, such as 401(k)s, 403(b)s, 457 plans, and the federal government’s Thrift Savings Plan, are set at $19,500 for 2021 and $20,500 for 2022. The catch-up contribution for employees ages 50 and older is $6,500 for both years. The limitation for SIMPLE (Savings Incentive Match Plan for Employees) retirement accounts is set at $13,500 for 2021 and $14,000 for 2022.

Individual Retirement Accounts (IRAs)

The deductible amount for individual retirement account (IRA) contributions is set at $6,000 for both 2021 and 2022. People ages 50 and older can contribute an additional $1,000 each year.

The phaseout levels for the deduction, though, are adjusted upward. If either a taxpayer or their spouse is covered by a workplace retirement plan during the year, the deduction may be reduced or phased out until it is eliminated. 

The phaseout ranges for 2021 are:

• If an individual is an active participant in an employer retirement plan, the deduction phaseout for adjusted gross incomes is $66,000–$76,000 for single individuals and heads of households, and $105,000–$125,000 for joint returns.
• For an IRA contributor who is not an active participant in another plan but whose spouse is an active contributor, the phaseout ranges from $198,000 to $208,000.
• For a married active contributor filing a separate return, there is no adjustment and the phaseout range will remain $0 to $10,000.

The phaseout ranges for 2022 are:

• If an individual is an active participant in an employer retirement plan, the deduction phaseout for adjusted gross incomes is $68,000–$78,000 for single individuals and heads of households, and $109,000–$129,000 for joint returns.
• For an IRA contributor who is not an active participant in another plan but whose spouse is an active contributor, the phaseout ranges from $204,000 to $214,000.
• For a married active contributor filing a separate return, there is no adjustment and the phaseout range will remain $0 to $10,000.

Roth IRAs

For 2022, the phaseout ranges for Roth IRA contributions are $129,000 to $144,000 for single taxpayers and heads of households and $204,000 to $214,000 for joint returns. The Roth IRA phaseout for a married individual’s separate return remains at $0 to $10,000.

Saver’s Credit

Low-income taxpayers who make contributions to 401(k), 403(b), SIMPLE, SEP (Simplified Employee Pension), or certain 457 plans, as well as traditional and Roth IRAs, are entitled to claim a nonrefundable tax credit in addition to their exclusions or deductions. 

Married taxpayers filing joint returns are eligible to claim a credit for contributions of up to $4,000 at a rate for 2022 of:

• 50% with AGI up to $41,000
• 20% with AGI up to $44,000
• 10% with AGI up to $68,000

Heads of households can claim, in 2022, a credit for up to $2,000 of contributions at a rate of:

• 50% with AGI up to $30,750
• 20% with AGI up to $33,000
• 10% with AGI up to $51,000

All other taxpayers are eligible to claim, for 2022, a credit for up to $2,000 of contributions at a rate of:

• 50% with AGI up to $20,500
• 20% with AGI up to $22,000
• 10% with AGI up to $34,000

The Bottom Line

Every year, usually in November, the IRS announces rates and inflation adjustments that affect federal taxes for the coming tax year, including tax brackets, standard deductions, tax credits, IRA rules, and more. It’s important to be aware of any changes that the IRS makes to file your taxes properly and avoid overpayment or underpayment.