IRS Announces Annual Inflation Adjustments for Tax Year 2022

On Wednesday, November 10, 2021, the IRS announced the tax year 2022 annual inflation adjustments for more than 60 tax provisions. Revenue Procedure 2021-45 provides details about these annual adjustments.

The changes apply to the 2022 tax year, for taxes filed in 2023. Some key takeaways from Revenue Procedure 2021-45 include:

  • Basic tax rates have not changed for 2022 although income brackets for each rate have.
  • The standard deduction for married couples filing jointly for tax year 2022 rises to $25,900. For single taxpayers, the standard deduction rises to $12,950.
  • The annual gift exclusion for calendar year 2022 will be $16,000 vs, $15,000 in 2021.
  • The monthly limitation for the qualified transportation fringe benefit and the monthly limitation for qualified parking increases to $280.
  • For taxable years beginning in 2022, there will be a $2,850 limit on voluntary employee salary reductions for contributions to health flexible spending arrangements. If the plan permits carryover of unused amounts, the maximum carryover is $570.
  • The maximum credit allowed for adoptions for tax year 2022 is the amount of qualified adoption expenses up to $14,890 up from $14,440 in 2021.

More information on these annual inflation adjustments for tax year 2022 can be found here.

 


This text is provided with the understanding that ECFA is not rendering legal, accounting, or other professional advice or service. Professional advice on specific issues should be sought from an accountant, lawyer, or other professional.

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