Introduction
The new year is just around the corner and with it, come changes to the federal tax code. In 2022, taxpayers can expect to see some major modifications to the federal tax rates and other laws that will affect their overall tax liability. The goal of this article is to provide an overview of these changes and discuss what taxpayers should expect when filing their 2022 federal taxes.
What Are The 2022 Federal Tax Rates?
The 2022 federal tax rates are still to be determined, but the latest information from the IRS suggests that they may remain relatively stable. The seven tax brackets, which range from 10% to 37%, are expected to remain the same. However, the income thresholds associated with each bracket may be adjusted to reflect inflation and other economic factors. Those adjustments could result in a lower or higher tax rate for some taxpayers.
Changes To Deductions
In addition to the federal tax rates, taxpayers should also be aware of changes to the deductions available for the 2022 tax year. The standard deduction, which is the amount of income excluded from taxation, is expected to increase slightly. The additional standard deduction for those over the age of 65 is also expected to increase. There may also be changes to the deductions for charitable contributions, mortgage interest, and health insurance premiums.
Changes To Credits
Changes to the tax credits available in 2022 are also expected. The child tax credit and the earned income tax credit are both expected to increase, while other credits such as the education and adoption credits may be adjusted or eliminated. Taxpayers should consult their tax advisor to determine which credits they may be eligible for in the upcoming tax year.
State Tax Rates
In addition to the federal tax rates, taxpayers should also be aware of their state tax rate. Each state has its own tax code and rate structure, and taxpayers should be sure to consult their state’s Department of Revenue to determine the applicable tax rate. Taxpayers should also be aware that some states may have special deductions or credits available to them, which could affect their overall tax liability.
Tax Planning
Taxpayers should also consider taking advantage of tax planning strategies in order to reduce their overall tax liability. These strategies can include deferring income, maximizing deductions, and taking advantage of tax credits and deductions. Taxpayers should consult their tax advisor to determine the best strategy for their individual situation.
Tax Software
Finally, taxpayers should consider using tax software to help them prepare their 2022 federal tax return. Tax software can help taxpayers ensure that they are taking advantage of all of the deductions and credits available, as well as help them to file their return accurately and on time. Taxpayers should consult their tax advisor to determine the best tax software for their individual situation.
Conclusion
The 2022 federal tax rates are still to be determined, but taxpayers can expect to see some changes to the deductions, credits, and other laws that could affect their overall tax liability. Taxpayers should consult their tax advisor to determine how these changes could affect their individual situation and to develop a tax planning strategy that works best for them. Additionally, taxpayers should consider using tax software to help them accurately and easily prepare their 2022 federal tax return.
