The 2021 tax season is behind us, but that doesn’t mean you can’t stop thinking about your finances. Savvy taxpayers who want to save money usually build an effective tax strategy right at the start of the year – and you should, too! If you’re looking to avoid receiving a steep tax bill for 2022, it helps to know which tax bracket you’re in. This way, you can tweak your tax withholding and use tax-saving tools to reduce your taxable income. Below, we’ve detailed the changes in the tax brackets for 2022 in comparison to 2021. Read on.
Why are tax brackets important?
In the United States, federal tax rates are graduated. But what does this mean? Say you filed your taxes as a single filer in 2021, and you had a taxable income of $95,000. Since $95,000 was in the 24% tax bracket for single filers, did you have to pay 24% tax on the whole of $95,000? No! If you check your tax returns, you’ll find that you paid less than that amount. That’s because only the part of your income that’s above $86,375 (the taxable amount for the 24% bracket in 2021) was taxed at 24%. Your remaining income was taxed at 22%, 12%, and 10% rates – that is how marginal tax rates work.
Federal income tax brackets for 2022
- Single filers pay 37% for incomes over $539,900 (spouses filing jointly pay the same rate for an income of $647,850)
- Single filers pay 35% for incomes over $215,950 (spouses filing jointly pay the same rate for an income of $431,900)
- Single filers pay 32% for incomes over $170,050 (spouses filing jointly pay the same rate for an income of $340,100)
- Single filers pay 24% for incomes over $89,075 (spouses filing jointly pay the same rate for an income of $178,150)
- Single filers pay 22% for incomes over $41,775 (spouses filing jointly pay the same rate for an income of $83,550)
- Single filers pay 12% for incomes over $10,275 (spouses filing jointly pay the same rate for an income of $20,550)
- Single filers pay 10% for incomes up to or under $10,275 (spouses filing jointly pay the same rate for incomes up to or under $20,550)
Federal income tax brackets for 2021
- Single filers paid 37% for incomes over $523,600 (spouses filing jointly paid the same rate for an income of $628,300)
- Single filers paid 35% for incomes over $209,425 (spouses filing jointly paid the same rate for an income of $418,850)
- Single filers paid 32% for incomes over $164,925 (spouses filing jointly paid the same rate for an income of $329,850)
- Single filers paid 24% for incomes over $86,375 (spouses filing jointly paid the same rate for an income of $172,750)
- Single filers paid 22% for incomes over $40,525 (spouses filing jointly paid the same rate for an income of $81,050)
- Single filers paid 12% for incomes over $9,950 (spouses filing jointly paid the same rate for an income of $19,900)
- Single filers paid 10% for incomes up to or under $9,950 (spouses filing jointly paid the same rate for an income up to or under $19,900)