2022 Tax Changes and Information
Click here for the most up-to-date tax brackets and other information for 2022.
President Biden proposed sweeping changes to the tax rates for 2022 but the effort has been bogged down in Congress. Thus, we enter 2022 with largely the same tax situation we were in 2021 but better! Why better? Because many of the brackets increased for inflation. This means our marginal, or last, dollar earned may be at a lower tax bracket than it was in 2021.
The long-term capital gains tax rates are NOT currently going to increase. At the end of last year, that looked like a nearly sure thing. But Congress is doing their job, duking it out over every detail, and the deal has not been made. So we are entering 2022 with the same tax rates as we had previously for gains on our investments. This is good news for almost all of our investor clients.
CLICK HERE for the 2022 tax planning video. Karl Frank interviews Mike Miller, CPA.
For people contributing to retirement plans, the limits increased. This is also good news. 401k employee contributions are now $20,500 and the maximum that can be put in, including the employer contribution, is $61,000. This is good news for retirement savers.
For folks who will pass on assets to their heirs, estate taxes are less of a problem in 2022. The per person estate tax does not affect anyone with less than $12.06 million, twice that for a married couple. The bad news is the estate tax limit is scheduled to sunset. Estate tax limits decrease, meaning estate taxes will affect a lot more people, in the year 2025. It may be $5 million, adjusted upwards for inflation, unless Congress acts before 2025.
And we still believe in the power of financial planning to help our clients get more choice and control over how and when they are taxed. Depending upon your unique situation, you may want to learn more about Roth IRAs, Roth 401ks, Roth conversions and other ways to possibly grow your assets with less taxes. Contact your advisor to learn more!
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