2022 and 2023 Tax Thresholds

The 2022 U.S. income tax filing season is fast approaching and as result, individuals should now be looking at which tax planning opportunities are available to them to reduce their upcoming tax burden.

With that in mind, we are supplying a listing of the income tax thresholds and tax brackets for the upcoming 2022 filing season as well as the 2023 tax figures, which were recently released by the Treasury Department.

Standard Deduction

The standard deduction reduces your taxable income to the extent it is greater than your allowable itemized deductions. For 2022, the standard deduction is $12,950 for single filers & $25,900 for those married filing jointly. The standard deduction is $1,400 more than the table below for those that are married filing jointly and 65 or older or blind; and $1,750 higher if a taxpayer is unmarried or filing as head of household. Deduction amounts are increased for inflation in 2023, as presented in the table below.

Retirement Plan Thresholds

For 2023 and 2022, the maximum elective deferrals for retirement plans are limited to:

Health Savings Accounts (HSA) and High-Deductible Health Plans

Eligible Purchases: As a reminder, HSAs, FSAs, and HRAs (health reimbursement arrangements) can now be used to pay for over-the-counter medications without a prescription as well as certain menstrual care products, such as tampons and pads.

Dependent Care – FSA

A dependent care FSA is a pretax benefit account used to pay for dependent care services such as day care, preschool, summer camps and non-employer sponsored before or after school programs. Funds are eligible for expenses relating to children under the age of thirteen or incapable of self-care who live with the account holder more than half the year.

The dependent care FSA maximum, which is set by statute and is not subject to inflation-related adjustments, is $5,000 a year for individuals or married couples filing jointly, or $2,500 for a married person filing separately. Married couples have a combined $5,000 limit, even if each has access to a separate dependent care FSA through his or her employer.

AMT Rates, Exemptions, & Phaseouts

Net Investment Income Tax & Additional Medicare Tax

Net investment income (NII) includes dividends, rents, interest, passive activity income, capital gains, annuities, and royalties. Passive pass-through income is subject to the NII tax.

The NII tax does not apply to nonpassive income: Self-employment income, income from an active trade or business, portions of the gain on the sale of an active interest in a Partnership or S corporation with investment assets, or IRA or qualified plan distributions.