(DailyDig.com) – In the face of inflated prices — the largest in three decades, in fact — the Internal Revenue Service (IRS) announced some changes to America’s tax brackets. But what exactly does that mean, and how will it affect the average citizen’s bottom line?
The IRS says the shift is an attempt to avoid “bracket creep.” The Tax Foundation defines bracket creep as when inflation forces taxpayers into a higher tax bracket. The same phenomenon causes an increase in income tax without an equivalent increase in income.
— Daily Wire (@realDailyWire) November 11, 2021
Inflation is undoubtedly impacting the lives of Americans as fuel, used vehicles, and food prices all skyrocketed in 2021. Some experts believe the price hike is primarily due to monetary stimulus payments. Americans are also facing a 13-year high price for heating their homes, according to the US Energy Information Administration.
New Individual Filing Brackets:
As for the bracket adjustments, most Americans will benefit from them. Here’s how much tax individual filers can expect to pay, per income, in 2022:
- Income of up to $10,275 – 10% tax.
- Income between $10,275 and $41,775 – 12% tax.
- Income between $41,775 and $89,075 – 22% tax.
- Income between $89,075 and $170,050 – 24% tax.
- Income between $170,050 and $215,950 – 32% tax.
- Income between $215,950 and $539,900 – 35% tax.
Incomes over the $539,900 threshold are subject to a 37% income tax for individual filers.
New Joint Filing Brackets
The IRS also adjusted brackets in this range for joint filers:
- Income up to $20,550 – 10% tax.
- Income between $20,550 to $83,550 – 12% tax.
- Income between $83,550 to $178,150 – 22% tax.
- Income between $178,150 to $340,100 – 24% tax.
- Income between $340,100 to $431,900 – 32% tax.
- Income between $431,900 to $647,850 – 35% tax.
Joint filers making more than $647,850 will pay 37%, but only on amounts over that threshold. Furthermore, all of these changes will only apply to the 2022 filings processed in 2023.
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