Tax brackets for 2022

There are seven federal tax brackets for the 2022 tax year: 10%, 12%, 22%, 24%, 32%, 35% and 37%. Every year the IRS modifies the tax brackets for inflation. Your specific bracket depends on your taxable income and filing status. These are the rates for taxes due in April 2023.

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Marginal tax rate

The marginal tax rate is the highest tax rate you have to pay for every additional dollar of income you earn. A 25% marginal tax rate means that you will pay 25 cents of every extra dollar you report on your earnings.

Effective Tax Rate

The effective tax rate is your total tax amount divided by your total earned income.

Single Filers Tax Brackets for 2022

Tax rate Taxable income bracket Your taxes
10% $0 to $10,275 10% of taxable income
12% $10,276 to $41,775 $1,027.50 plus 12% of the amount over $10,275
22% $41,776 to $89,075 $4,807.50 plus 22% of the amount over $41,775
24% $89,076 to $170,050 $15,213.50 plus 24% of the amount over $89,075
32% $170,051 to $215,950 $34,647.50 plus 32% of the amount over $170,050
35% $215,951 to $539,900 $49,335.50 plus 35% of the amount over $215,950
37% $539,901 or more $162,718 plus 37% of the amount over $539,900

Married Filing Jointly Tax Brackets for 2022

Tax rate Taxable income bracket Your taxes
10% $0 to $20,550 10% of taxable income
12% $20,551 to $83,550 $2,055 plus 12% of the amount over $20,550
22% $83,551 to $178,150 $9,615 plus 22% of the amount over $83,550
24% $178,151 to $340,100 $30,427 plus 24% of the amount over $178,150
32% $340,101 to $431,900 $69,295 plus 32% of the amount over $340,100
35% $431,901 to $647,850 $98,671 plus 35% of the amount over $431,900
37% $647,851 or more $174,253.50 plus 37% of the amount over $647,850

Married Filing Separately Tax Brackets for 2022

Tax rate Taxable income bracket Your taxes
10% $0 to $10,275 10% of taxable income
12% $10,276 to $41,775 $1,027.50 plus 12% of the amount over $10,275
22% $41,776 to $89,075 $4,807.50 plus 22% of the amount over $41,775
24% $89,076 to $170,050 $15,213.50 plus 24% of the amount over $89,075
32% $170,051 to $215,950 $34,647.50 plus 32% of the amount over $170,050
35% $215,951 to $323,925 $49,335.50 plus 35% of the amount over $215,950
37% $323,926 or more $87,126.75 plus 37% of the amount over $323,925

Head of Household Tax Brackets for 2022

Tax rate Taxable income bracket Your Taxes
10% $0 to $14,650 10% of taxable income
12% $14,651 to $55,900 $1,465 plus 12% of the amount over $14,650
22% $55,901 to $89,050 $6,415 plus 22% of the amount over $55,900
24% $89,051 to $170,050 $13,708 plus 24% of the amount over $89,050
32% $170,051 to $215,950 $33,148 plus 32% of the amount over $170,050
35% $215,951 to $539,900 $47,836 plus 35% of the amount over $215,950
37% $539,901 or more $161,218.50 plus 37% of the amount over $539,900

2022 Standard Deduction

The amount of the standard deduction reduces your taxable income. Usually, the IRS adjusts the standard deduction for inflation every year.

When you file your taxes, you have the option to choose a standard deduction or itemized deductions. It only makes sense to itemize your deductions if their total value is higher than the standard deduction.

 

Filing Status Deduction Amount
Single $12,950
Married Filing Jointly $25,900
Head of Household $19,400

Long-term capital gain taxes

You owe a capital gains tax on the profit made from selling capital assets such as stocks, options, bonds, real estate, and cryptocurrencies. Long-term capital gains have a more favorable tax treatment than your ordinary taxable income. To qualify for the long-term status, you must realize a profit on an investment after holding it for one calendar year or 365 days. Short-term capital gains are taxable as ordinary income

Taxable Income Over
Tax Rate Single Married Filing Jointly Head of Household
0% $0 $0 $0
15% $41,675 $83,350 $55,800
20% $459,750 $517,200 $488,500

Net Investment Income tax

Net Investment income tax of 3.8% applies to all taxpayers with net investment income above specific threshold amounts. In general, net investment income includes

  • Long Term Capital gains
  • Short capital gains
  • Dividends
  • Taxable interest
  • Rental and royalty income
  • Passive income from investments you don’t actively participate in
  • Business income from trading financial instruments or commodities
  • The taxable portion of nonqualified annuity payments

You will pay 3.8% of the smaller value between

  1. Your total net investment income, or
  2. the excess of modified adjusted gross income over the following threshold amounts:
  • $200,000 for single and head of household filers
  • $250,000 for married filing jointly or qualifying widow(er)
  • $125,000 for married filing separately

About Stoyan Panayotov

I am a fee-only financial advisor and the founder of Babylon Wealth Management. As fiduciary advisors, we provide bespoke wealth management and personalized financial planning to busy families in the Bay Area and nationally. Many of our clients are tech workers, physicians, business owners, professionals preparing for retirement and young families looking to build financial independence.

I started Babylon Wealth Management to help young families and successful professionals build, grow and preserve their wealth. Being a fee-only financial advisor, I never earn sales commissions or sell investment products. Furthermore, I am committed to acting in my clients’ best interest by providing trusted advice and bespoke wealth management solutions. I enjoy helping clients develop robust and personalized long-term financial plans to achieve their personal and financial goals.

After completing a bachelor’s degree in Accounting at Varna University of Economics in Bulgaria, at the age of 23, I moved to New York City to pursue a Master of Business Administration at Pace University. I was fortunate enough to have a full merit-based scholarship and finished graduate school with no student loans. Upon completing grad school, I joined the ranks on Wall Street for nearly two years. I specialized in risk management and option strategies for equity and fixed income products for Deutsche Bank and Wells Fargo. In 2006 I obtained a highly recognized CFA designation.

Living in New York without family support was a life-changing experience for me. II arrived at JFK Airport on August 24, 2002. I stayed in a hostel for two weeks and later moved in with three of my fellow Bulgarian students into a one-bedroom apartment in the Bronx. There was a time in life when all I owned was $200, just enough to pay for the next month’s rent. Many times, I contemplated returning to Bulgaria, but somehow, I always pushed through life’s adversities. I’ve learned to appreciate each moment, big or small, that life presents. These challenges have helped me develop strength and flexibility, which supports my practice as a financial advisor.

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