2022 is already halfway over! There have been quite a few changes to tax rules for this year already (as there are every year) and we outline some important ones below. Tax changes are fluid – We will do our best to keep you updated with any changes the IRS makes.
- Child Tax Credit – For 2022, the Child Tax credit reverts back to its pre-2021 form. This means no more advanced payments, and the amount per child drops back to $2,000. (It was $3,000 for the 2021 tax year for children ages 6-17 and $3,600 for kids under 6.) Also, only children aged 16 and under qualify now.
- Child and Dependent Care Tax Credit – The changes for this credit for 2021 were again only for that year. The credit for the 2022 tax year will now be non-refundable. This means it cannot generate a credit/refund for you. So, if your credit is $600, and you owe $500, you will just not owe anything, you won’t get $100 refund. The more money you make, the smaller the reimbursement. Families making between $45,000 and $438,000 can claim 20% of their care expenses (up to $600 in credits for one child or $1,200 if you have two or more children.) The full credit will only be available to families making less than $15,000 per year in 2022.
- 2022 Tax Brackets – The tax brackets for 2022 are slightly larger than 2021, though the tax rates remain the same.
| Tax Rate | Taxable Income (Single) | Taxable Income (Married Filing Jointly) |
Taxable Income (Head of Household) |
| 10% | Up to $10,275 | Up to $20,550 | Up to $14,650 |
| 12% | $10,276 to $41,775 | $20,551 to $83,550 | $14,651 to $55,900 |
| 22% | $41,776 to $89,075 | $83,551 to $178,150 | $55,901 to $89,050 |
| 24% | $89,076 to $170,050 | $178,151 to $340,100 | $89,051 to $170,050 |
| 32% | $170,051 to $215,950 | $340,101 to $431,900 | $170,051 to $215,950 |
| 35% | $215,951 to $539,900 | $431,901 to $647,850 | $215,951 to $539,900 |
| 37% | Over $539,900 | Over $647,850 | Over $539,900 |
- Standard Deduction Rates – These rates have increased for 2022 to account for inflation.
| Year | Single | Single over age 65 | Married | Head of Household | HOH over age 65 |
| 2022 | $12,950 | $14,700 | $25,900 | $19,400 | $21,150 |
| 2021 | $12,550 | $14,250 | $25,100 | $18,800 | $20,500 |
- Charitable CASH Gift Donations – The above-the-line deduction for charitable cash contributions ($300, or $600 for married couples) expired at the end of 2021 for those that do not itemize.
- Retirement Contributions – Some retirement accounts now have higher maximum contribution limits. The 401(k) jumps from $19,500 to $20,500. For SIMPLE IRAs, the limit has increased to $14,000. For ages 50 and up, catch up amounts remain the same: $6,000 for 401(k) and $3,000 for SIMPLE IRA. Contribution limits for Traditional and Roth IRAs stay the same.
- Standard Mileage Rates – The standard mileage rate rose from $0.56 to 58.5 cents for the first half of 2022. Effective July 1 – December 31, 2022, the standard mileage rate for business travel will be 62.5 cents per mile. If any of your employees are driving to pick up parts or your techs are taking classes to further their knowledge, you can reimburse their mileage. This is a reimbursement, not an expense, so it’s tax-free money to your team members and a tax deduction for the business. A win-win!
- Flex Spending Accounts – For 2022, the employee contributions to a flex spending account are increased to $2,850. This is up by $100 from 2021. The maximum carryover amount has also increased to $570, up from $550.
As always, the IRS can make tax changes at any point! We will do our best to keep these updated here.
