EarnTaxes

These Are the New 2022 Tax Brackets and Why They Matter

Dayana Yochim  |  March 4, 2022

The IRS 2022 tax bracket adjustments.

In case the stress of finishing your 2021 taxes wasn’t burden enough, the 2022 tax brackets show us what we’ll be paying in federal income tax rates next year.

Just like previous years, there are seven federal tax brackets for 2022: 10%, 12%, 22%, 24%, 32%, 35% and 37%. States have their own rules on how they tax income, if they tax income at all.

What will change is the range of income that is taxed at each of the seven rates. For example, in 2021 the income bracket subject to the 22% tax rate for a married couple filing jointly was between $81,050 and $172,750. In 2022 the 22% tax bracket has shifted slightly higher to between $83,551 and $178,150.

But before we get into the details of the 2022 tax brackets, let’s back up and untangle progressive tax math.

A refresher on how tax brackets work

The “progressive tax system” we have in the U.S. simply means not all of your income is taxed at the same rate. 

The first chunk of income you earn is taxed at the lowest tax rate (10%). The dollars you earn above that — and up to a specific amount — are taxed at the next higher tax rate (12%), and so on it goes until you earn so much that you somehow don’t have to pay taxes at all. (Apologies to gabillionaires for the snark.)

When someone says they are in the 22% tax bracket, it’s a bit of a misnomer. What that really means is that they pay 22% on the portion of their income subject to the highest tax rate — just the dollars that fall within that particular bracket — not every dollar they earn. In tax-speak, this is called the marginal tax rate.

And now, the 2021 tax brackets

Your tax bracket is based on your income and your filing status (single, married filing jointly, married filing separately, head of household). Each year the IRS adjusts tax brackets and other tax provisions to account for inflation. As you look at the brackets below, remember that the standard dedication you take is untaxed, be it $12,550 if you are a single person or $25,500 if you are married and filing jointly. This effectively makes everyone’s tax rates a little bit lower, since the amount they’re being taxed on isn’t what they’re really earning, explains David Barrett, CPA, Lecturer in Accounting at the Maine Business School at the University of Maine.

Tax rateIf you are single and your income is If you are married filing jointly and your income is
10%less than $10,275less than $20,550
12%between $10,276 and $41,775between $20,551 and $83,550
22%between $41,776 and $89,075between $83,551 and $178,150
24%between $89,076 and $170,050between $178,151 and $340,100
32%between $170,051 and $215,950between $340,101 and $431,900
35%between $215,950 and  $539,900between $431,901 and $647,850
37%more than $539,901more than $647,851

Source: IRS.gov

For comparison, here are the 2021 tax brackets:

Tax rateIf you are single and your income is If you are married filing jointly and your income is
10%less than $9,950less than $19,900
12%between $9,950 and $40,525between $19,900 and $81,050
22%between $40,525 and $86,375between $81,050 and $172,750
24%between $86,375 and $164,925between $172,750 and $329,850
32%between $164,925 and $209,425between $329,850 and $418,850
35%between $209,425 and  $523,600between $418,850 and $628,300
37%more than $523,600more than $628,300

Source: IRS.gov

2022 tax brackets examples

Let’s start with a married couple filing a joint return with $190,000 in taxable income. Note that these figures are created before deductions are taken! They will pay: 

  • 10% federal income tax on the first $20,550 of income (which comes to $2,055 in taxes) 
  • 12% on dollars $20,551 up to $83,550 ($7,559.88 in taxes)
  • 22% on $81,050 up to $172,750 ($20,174 in taxes)
  • 24% on $172,750 up to $190,00 ($4,140 in taxes)

All told, before deductions, this couple will pay a total of $33,928.88 in federal income taxes, which averages out to be 18% of their income. 

A single filer earning $60,000 in 2022 will pay:

  • 10% federal income tax on the first $10,275 of income (which comes to $1,027.50 in taxes) 
  • 12% on dollars $10,276 up to $41,775 ($3,779.88 in taxes)
  • 22% on $41,776 up to $60,000 ($4,009.28 in taxes)

The total federal income tax our single citizen pays before deductions is $8,816.66, which comes to a 15% of their income. For cocktail party smalltalk, however, this person can say that they are “in the 22% tax bracket” based on the tax rate they pay on the next dollars they earn.

What’s the big deal?

While tax brackets are useful tools, it’s always advisable to make as much money as possible. Every dollar you make means more money goes into your pocket, Barrett says. The only thing that changes is how much of that incremental dollar you get to keep.

The most important part of knowing your tax bracket is to use the knowledge to keep as many dollars in the lower brackets as possible. You do that by reducing your taxable income. The most effective ways to do that are to:

Funnel money into tax-deferred retirement accounts like a traditional IRA, a 401(k) or 403(b). Those dollars won’t count as taxable income in the year you make the contribution. You’ll owe income taxes on the back end when you start taking withdrawals. But hopefully by then you’re in a lower income tax bracket.

Take advantage of flexible spending accounts (FSAs) (including dependent-care FSAs) and health savings accounts (HSAs). The money you save in those will also reduce your taxable income for the year. Plus they have the advantage of being tax-free when you use the funds to pay for qualified expenses.

Take as many tax deductions as you’re allowed. When you take a tax deduction you get to subtract the amount from your taxable income. Most people take the standard deduction, which is an amount that you can automatically deduct from your income taxes without having to itemize. 

The IRS has also increased the standard deduction for 2022: 

  • The standard deduction in 2022 for single taxpayers and those who are married filing separately is $12,950. That is an increase of $400 from 2021.
  • The standard deduction for heads of households is $19,400, up $600 from 2021.
  • The standard deduction for married couples filing jointly is $25,900, an increase of $800 from 2021.

Although there is no limit on itemized deductions, the general rule is that you should take the standard deduction if the itemized account adds up to less than the standard deduction. 

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