By Jeffrey R. Wolfe, Senior Vice President and Manager, Wealth Planning Strategies
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As is our custom here in the Private Client Services group, it’s that time of year to deal with the inevitable, tax season. While taxes remain one of those “guarantees” of life, it’s important to note that very few substantive changes have been made for the 2022 tax year.
With indexing, the 2022 tax year standard deductions are $12,950 for single filers and $25,900 for married filing joint filers. The state and local tax deductions remain capped at $10,000 regardless of filing status, meaning most taxpayers will not itemize their tax returns. One change, though, is that the one time “above the line” charitable deductions of $300 single/$600 married have been eliminated.
Tax rates also remain unchanged with the top income tax bracket staying at 37%, applying to individuals with more than $539,900 in income ($647,850 for married taxpayers). For those “in the middle,” the middle tax bracket calls for a 24% rate. That rate begins at $89,075 single/$178,150 married. You need more than $170,050 single/$340,100 married to climb into the next bracket.
While tax laws haven’t changed much, there are some new provisions becoming effective for tax year 2023 that may require you to modify your planning going forward. Accordingly, our series will focus on issues to address for this year’s tax season, but when applicable, items to consider for the 2023 tax year also will be addressed.
Look for new blog topics every Tuesday until tax season ends on April 18, and remember your financial advisor is happy to work with you and your tax advisor to make filing your taxes as painless as possible. Happy Tax Season!
Benjamin F. Edwards does not provide legal or tax advice, therefore it is also important to consult with your legal and tax professionals for additional guidance tailored to your specific situation.