2022 Tax Rates

Federal tax rates are not increasing in 2022, although many in Congress would like to enact several tax hikes.  In fact, one could argue taxes are decreasing, since the amount of your income taxed at lower rates is increasing for 2022.

While the top federal tax rate remains at 37% for 2022, the income necessary to push you into this bracket is increasing by roughly 3% in 2022.  Most tax brackets will see similar increases, meaning more of your money will be taxed at lower rates in 2022.

In addition, the standard deduction for married couples is increasing by $800 to $25,900, reducing your taxable income.  (Approximately 90% of taxpayers opt for the standard deduction.)  Lastly, 401(k) contribution limits are increasing from $19,500 to $20,500, allowing you to contribute more and pay tax on fewer dollars.

Keep in mind that these tax rates were historically higher, prior to being lowered via legislation signed into law in late 2017.  That tax-cutting bill included a provision where the tax cuts would “sunset” at the end of 2025.  This means that if Congress doesn’t pass future legislation, the tax cuts we are enjoying today will expire on 12/31/25, and personal taxes will go up substantially in 2026.

John Vandyke, Founder