Each year at about this time the IRS announces various changes to the upcoming tax year, which are based on formulas that typically revolve around inflation. To be clear, these are not changes to tax policy, Congress passes those, and there are certainly many of them in the Build Back Better Act that may end up getting through in the next few weeks (including possibly some changes to the tax brackets). Instead, these are changes to things like tax brackets due to inflation (not changes from Congress), the standard deduction, and how much you can contribute to certain tax-advantaged accounts like 401ks/403bs/457s/HSAs, etc.
While many folks only think about taxes when they are filing them each year, you can often make better decisions by paying attention to some of these changes before (or as) they happen. So let’s briefly take a look at some of the changes for 2022. I won’t list all the details, just the ones that apply to the most folks.
Tax Brackets
Each tax bracket is increased due to inflation.
| Tax Rate | 2021 Single Filers | 2022 Single Filers | |
| 10% | Up to $9,950 | Up to $10,275 | |
| 12% | $9,951 to $40,525 | $10,276 to $41,775 | |
| 22% | $40,526 to $86,375 | $41,776 to $89,075 | |
| 24% | $86,376 to $164,925 | $89,076 to $170,050 | |
| 32% | $164,926 to $209,425 | $170,051 to $215,950 | |
| 35% | $209,426 to $523,600 | $215,951 to $539,900 | |
| 37% | $523,601 or more | $539,901 or more |
| Tax Rate | 2021 Married Filing Jointly | 2022 Married Filing Jointly | |
| 10% | Up to $19,900 | Up to $20,500 | |
| 12% | $19,901 to $81,050 | $20,550 to $83,550 | |
| 22% | $81,051 to $172,750 | $83,551 to $178,150 | |
| 24% | $172,751 to $329,850 | $178,151 to $340,100 | |
| 32% | $329,851 to $418,850 | $340,101 to $431,900 | |
| 35% | $418,851 to $628,300 | $431,901 to $647,850 | |
| 37% | $628,301 or more | $647,851 or more |
Standard Deduction
Single filers see a $400 increase, married filing jointly an $800 increase.
| Filing Status | 2021 | 2022 |
| Single | $12,550 | $12,950 |
| Married Filing Jointly | $25,100 | $25,900 |
| Married Filing Separately | $12,550 | $12,950 |
| Head of Household | $18,800 | $19,400 |
401k/403b/457 Retirement Plan Contribution Limits
401k/403b/457 plans get a $1,000 increase, SIMPLE IRAs get a $500 increase, and regular IRAs (Traditional or Roth) see no change. There is no change to the age 50 or over catch-up contributions ($6,500 for 401k/403b/457 and $1,000 for IRAs, as those are not currently indexed to inflation). For those 457 plans that have the special three-year catch-up provision, that’s always equal to double the under 50 amount, so that will increase by $2,000 to $41,000.
| Plan Type | 2021 | 2022 |
| 401k/403b/457 | $19,500 | $20,500 |
| IRA | $6,000 | $6,000 |
| SIMPLE IRA | $13,500 | $14,000 |
Health Care FSA and HSA Contribution Limits
$50 increase for Health Care FSA and Single HSA, $100 for Family HSA. No change to the $1,000 catch-up for HSAs for those over 55.
| Plan | 2021 | 2022 |
| Health Care FSA | $2,750 | $2,850 |
| HSA Single | $3,600 | $3,650 |
| HSA Family | $7,200 | $7,300 |
The changeover to the new tax year is always a good time to check on what your current contributions are to any of these plans and see if you might want to adjust anything. You should be able to change your 401k/403b/457 contributions at any time, but often can’t change your FSA/HSA contributions from your paycheck until open enrollment each year. (For most folks, that’s January 1st, but for some educators, you might not be able to change your FSA/HSA contribution until open enrollment for the next school year, typically at the end of this school year.)
You can also use the new tax brackets and standard deductions to do some advanced tax planning for 2022, possibly adjusting how much you contribute to various pre-tax plans or Roth plans to try to keep your marginal tax rate in the lowest tax bracket possible.
Fisch Financial 