11/29/2022 1 Comment 2021 tax tables![]() The Inflation Reduction Act and Taxes: What You Should KnowĪgain, the 2023 rates didn't change, but the brackets were adjusted for inflation. When determining the tax on capital gains, the rates that apply generally depend on how long you held the capital asset before selling it. It's important to note that the tax rates on capital gains from the sale of stocks, bonds, cryptocurrency, real estate, and other capital assets aren't necessarily the same as the tax rates mentioned above for wages, interest, retirement account withdrawals, and other "ordinary" income. (Note that the tax brackets for your state's income tax could contain a marriage penalty.) Capital Gains Tax Rates For 2021 returns, the marriage penalty was possible only for married couples with a combined taxable income above $628,300. As a result, only couples with a combined taxable income over $647,850 are at risk when filing their 2022 federal tax return. But now, as you can see in the tables above, only the top tax bracket contains the marriage penalty trap. The penalty is triggered when, for any given rate, the minimum taxable income for the joint filers' tax bracket is less than twice the minimum amount for the single filers' bracket.īefore the 2017 tax reform law, this happened in the four highest tax brackets. The difference between bracket ranges sometimes creates a " marriage penalty." This tax-law twist makes certain married couples filing a joint return pay more tax than they would if they were single (typically, where the spouses' incomes are similar). That's a lot of money, but it's still $37,045 less than if the 37% rate were applied as a flat rate on the entire $1 million (which would result in a $370,000 tax bill). So, for example, the tax on $1 million for a single person in 2022 is $332,955. The rest is taxed at lower rates as described above. (We can all dream, right?) If you're single, only your 2022 income over $539,900 is taxed at the top rate (37%). (That's $6,164 less than if a flat 24% rate was applied to the entire $100,000.) When you add it all up, your total 2022 tax is only $17,836. That leaves only $10,925 of your taxable income (the amount over $89,075) that is taxed at the 24% rate, which comes to an additional $2,622 of tax. After that, the next $47,300 of your income (from $41,776 to $89,075) is taxed at the 22% rate for $10,406 of tax. The next $31,500 of income (the amount from $10,276 to $41,775) is taxed at the 12% rate for an additional $3,780 of tax. Again, assuming you're single with $100,000 taxable income in 2022, the first $10,275 of your income is taxed at the 10% rate for $1,028 of tax. Tax Changes and Key Amounts for the 2022 Tax Year ![]()
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12/22/2022 12:20:19 am
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