2023 tax season: What you need to know

Katherine Tierney, CFA®
Senior Strategist, Retirement
We’ve seen many tax-related changes these past two years, and the 2022 tax year is no exception. From inflation adjustments to the expiration of pandemic-related tax breaks to newly effective laws, here are some changes that could impact your taxes for 2022. Keep in mind, this list is not all-encompassing, is only meant for educational purposes and is not intended as tax advice.
As in years past, tax brackets, standard deduction amounts and contribution limits for 401(k) plans were adjusted for inflation. While contribution limits for IRAs stayed the same, the income thresholds for traditional IRA deductibility and Roth IRA eligibility increased.
Single | Single | Married filing jointly | Married filing jointly | |
---|---|---|---|---|
Marginal rate | 2021 | 2022 | 2021 | 2022 |
10% | $0 – $9,950 | $0 – $10,275 | $0 – $19,900 | $0 – $20,550 |
12% | $9,951 – $40,525 | $10,276 – $41,775 | $19,901 – $81,050 | $20,551 – $83,550 |
22% | $40,526 – $86,375 | $41,776 – $89,075 | $81,051 – $172,750 | $83,551 – $178,150 |
24% | $86,376 – $164,925 | $89,076 – $170,050 | $172,751 – $329,850 | $178,151 – $340,100 |
32% | $164,926 – $209,425 | $170,051 – $215,950 | $329,851 – $418,850 | $340,101 – $431,900 |
35% | $209,426 – $523,600 | $215,951 – $539,900 | $418,851 – $628,300 | $431,901 – $647,850 |
37% | Over $523,600 | Over $539,900 | Over $628,300 | Over $647,850 |
Single | Single | Married filing jointly | Married filing jointly | |
---|---|---|---|---|
Marginal rate | 2021 | 2022 | 2021 | 2022 |
0% | $0 – $40,400 | $0 – $41,675 | $0 – $80,800 | $0 – $83,350 |
15% | $40,401 – $445,850 | $41,676 – $459,750 | $80,801 – $501,600 | $83,351 – $517,200 |
20% | Over $445,850 | Over $459,750 | Over $501,600 | Over $517,200 |
2021 | 2021 | 2022 | 2022 | |
---|---|---|---|---|
Filing status | Below age 50 | At least age 65 or blind | Below age 65 | At least age 65 or blind |
Single | $12,550 | $14,250 | $12,950 | $14,700 |
Married filing jointly | $25,100 | $25,100 plus $1,350 per qualifying spouse | $25,900 | $25,900 plus $1,400 per qualifying spouse |
2021 | 2021 | 2022 | 2022 | |
---|---|---|---|---|
Contribution type | Below age 50 | Age 50 and up | Below age 50 | Age 50 and up |
$6,000 | $7,000 | $6,000 | $7,000 | |
Elective deferral to 401(k), 403(b), 457(b) | $19,500 | $26,000 | $20,500 | $27,000 |
In 2021, taxpayers enjoyed several tax breaks that have since expired. If you were able to take advantage of these benefits, you could see a meaningful bump in your 2022 taxes.
The Inflation Reduction Act extended or modified certain tax credits that could impact your 2022 taxes.
The premium tax credit helps eligible individuals cover their Affordable Care Act (ACA) health care premiums.
The Inflation Reduction Act increased the credit amount from 26% to 30% of the cost to install qualifying electric, water heating or temperature control systems for your home that use solar, wind, geothermal, biomass or fuel cell power.
The Inflation Reduction Act also revised the clean vehicle tax credit (formerly called the electric vehicle tax credit). Most changes aren’t effective until 2023, but there are a few provisions that could impact your 2022 taxes:
Actions to consider
- To prepare for your tax filing, get your paperwork in order. Check out our tax-filing checklist for a list of common documents and information you may need to complete your tax return.
- Given the expiration of so many tax breaks, you may want to plan for a larger tax bill or smaller refund this year. One way to do this is to reserve some cash to meet your potential tax liabilities.
- There are still some steps you may be able to take to lower your taxes:
- If you haven’t already maxed out on your contributions, consider making a 2022 IRA contribution. It could help you progress toward your retirement goals and lower your tax bill if you qualify for a deduction. You have until the tax filing deadline to do so. You could also get a jump start on your 2023 taxes by making a 2023 IRA contribution. For 2023, the IRA contribution limits increase to $6,500 for individuals below age 50 and $7,500 for individuals 50 and older.
- If you took a COVID-19-related distribution from a retirement account in 2020, you could return those funds to your retirement account by the tax-filing deadline (including extensions). You have up to three years from the day after you received your distribution to return those funds, and they do not count toward the annual contribution limits.
- If you turned 72 in 2022, don’t forget to take your required minimum distribution (RMD) or you’ll face a 50% penalty for any undistributed funds. You have until April 1, 2023, to take your first RMD.
Katherine Tierney is a Senior Retirement Strategist on the Client Needs Research team at Edward Jones. The Client Needs Research team develops and communicates advice and guidance for client needs, including retirement, education, preparing for the unexpected and leaving a legacy. Katherine has more than 15 years of financial services and retirement experience. She is a contributor to Edward Jones Perspectives and has been quoted in various publications.