Wondering what’s changed in the tax world from last year? We put together the top six 2022 federal tax changes that taxpayers like you should know about before filing your income tax return in 2023.
Tax year 2021 saw major tax changes due to the coronavirus pandemic, but many of those changes went away in 2022. Let’s look at the main events and how they might impact your tax refund this year.
The Child Tax Credit (CTC) saw some enhancements last year, including half the credit amount paid to parents in advance monthly payments and an increase to the credit amount itself. These changes were temporary and have not been extended through tax year 2022.
Take a look at the table below to compare last year’s enhanced CTC with this year’s.
| Requirements | 2021 CTC | 2022 CTC |
|---|---|---|
| Amount | Up to $3,600 (depending on age) | $2,000 |
| Dependent’s age | Children ages 5 and younger qualify for up to $3,600 Children ages 6-17 qualify for up to $3,000 | Children under 17 |
| Income thresholds | Additional credit amount of up to $1,600 began phasing out at $75,000 for single filers, $112,500 for heads of household, and $150,000 for joint filers. Capped at $200,000 ($400,000 for joint filers) | Credit limited to under $200,000 for single and head-of-household filers or $400,000 for married couples filing jointly |
The Earned Income Tax Credit (EITC) saw several critical changes in 2021 that no longer apply in 2022. The amount you receive depends on your income level, filing status, and the number of children you have.
Working childless adults can still qualify for this credit, but the age requirement and credit amounts have changed. Have a look at the table below to compare this year’s EITC requirements to last year’s.
| Requirements | 2021 EITC | 2022 EITC |
|---|---|---|
| Maximum credit amounts | $1,520-$6,728 | $560-$6,935 |
| Age limit for childless workers | Ages 19+ | Ages 25-64 (still pending IRS confirmation) |
| Refundable? | Yes | Yes |
| Maximum earned income amount (for joint filers with 3+ kids) | $57,414 | $59,187 |
For more detailed information about the EITC and to estimate how much you can claim this tax year, check out our Earned Income Tax Credit calculator.
This credit is no longer refundable in 2022, and the maximum credit percentage dropped to 35 percent (down from 50 percent last year). You can claim up to $3,000 in expenses for one child under 13 and up to $6,000 for two or more children under 13.
There were no additional stimulus checks for 2022, meaning the Recovery Rebate Credit will no longer be available this tax year.
The income tax rates did not change for 2022, but the income ranges widened slightly due to inflation adjustments.
Here are the tax brackets for 2022:
| Tax rate | Single filer | Joint filer | Married filing separately | Head of household |
|---|---|---|---|---|
| 10% | $0 to $10,275 | $0 to $20,550 | $0 to $10,275 | $0 to $14,650 |
| 12% | $10,276 to $41,775 | $20,551 to $83,550 | $10,276 to $41,775 | $14,651 to $55,900 |
| 22% | $41,776 to $89,075 | $83,551 to $178,150 | $41,776 to $89,075 | $55,901 to $89,050 |
| 24% | $89,076 to $170,050 | $178,151 to $340,100 | $89,076 to $170,050 | $89,051 to $170,050 |
| 32% | $170,051 to $215,950 | $340,101 to $431,900 | $170,051 to $215,950 | $170,050 to $215,950 |
| 35% | $215,951 to $539,900 | $431,901 to $647,850 | $215,951 to $323,925 | $215,951 to $539,900 |
| 37% | $539,901 or more | $647,851 or more | $323,926 or more | $539,901 or more |
The Internal Revenue Service (IRS) also increased the standard deduction amount for 2022. The standard deduction is an automatic deduction all filers can take (unless you choose to take itemized deductions).
Here are the new 2022 standard deduction amounts:
For more information on all of the 2022 tax adjustments due to inflation, you can check out the IRS’s detailed article about it.
The IRS also announced changes for tax-advantaged accounts such as retirement plans and health savings accounts (HSAs) this year.
If you have a 401(k), you can contribute up to $20,500 for 2022, a $1,000 increase from last year.
Those with an HSA can also contribute more this year. The annual contribution limit for individuals increased to $3,650 for 2022 ($50 increase). If you have a family plan, the annual contribution limit is now $7,300 ($100 increase).
Some other changes to keep in mind include the following:
Sometimes it’s also helpful to review what tax laws have stayed the same compared to last year, so we’ve covered a few topics you might be wondering about.
Due to the pandemic, the 2021 tax code changed in many ways. Most COVID-related enhancements have expired for 2022, and several tax breaks from last year no longer apply. Not to mention, we’ve seen a significant jump in inflation this year, which led to additional tax adjustments.
Make sure to review this year’s tax changes to avoid unpleasant surprises when filing your federal tax return this season!