WASHINGTON, D.C., USA — As inflation increases the price of everything, the IRS is adjusting its tax brackets for 2022.
This means married couples would need to make almost $20,000 more next year to enter the top tax bracket, with the rate set at 37 percent.
According to CBS News, the IRS usually adjusts tax brackets each year in response to rising prices, but says this year's increases are "greater than usual."
This means that while basic income tax rates — the lowest at 10 percent and highest at 37 percent — set by Congress in the 2017 Tax Cuts and Jobs Act won't change, some people might not fall into the same tax bracket.
Inflation has accelerated this year due to multiple factors, including supply chain issues and labor shortages.
Consumer prices in October increased 6.2 percent compared to a year ago, the Bureau of Labor Statistics said Wednesday.
The new tax bracket income thresholds have increased around three percent, CBS News says. For context, CBS News says the increases were closer to one percent last year.
Here's how the new thresholds for the seven tax brackets in 2022 break down:
- 10 percent for individuals with incomes of $10,275 or less; under $20,550 for married couples filing jointly.
- 12 percent for incomes over $10,275; $20,550 for married couples
- 22 percent for incomes over $41,775; $83,550 for married couples
- 24 percent for incomes over $89,075; $187,150 for married couples
- 32 percent for incomes over $170,050; $340,100 for married couples
- 35 percent for incomes over $215,950; $431,900 for married couples
- 37 percent for incomes over $539,900; $647,850 for married couples
The personal exemption will remain at 0, the same as 2021. It was eliminated as part of the Tax Cuts and Jobs Act.
The IRS is also increasing the standard deduction for married couples by $800 to $25,900. This also affects individuals, with the standard deduction rising $400 to $12,950.
Additionally, heads of households benefit from a $600 increase in the standard deduction, which will be $19,400 for tax year 2022.
For more information on what the IRS is changing, click here.