The year 2022 brought some relief to people and businesses following the pandemic and vaccination campaign. The year 2022 has seen many ups and downs from economic and other perspectives.
Because of the conflict between Russia and Ukraine, fuel prices and inflation increased, which decreased the disposable income of ordinary Americans. Sanctions on Russia by the EU and UN and fuel politics of different countries worsen the inflation situation.
In order to combat inflation, the government printed more dollars, which led to higher wages and increased aggregate demand. It was a bandage solution that did not work because people with more money increased demand, but limited supplies and high fuel prices increased prices further.
From the government, there is good news regarding taxes. Because we are currently experiencing very high inflation, which is why the IRS will be increasing the standard deduction on your taxes.
You could be taking home more money next year because the IRS announced the adjustment in the tax brackets for the year 2023. You could keep more of your own money because of the changes made by the IRS. It may ease the burden on your family’s budget.
Why is this happening?
Our tax rate is automatically adjusted for inflation. This is done to prevent taxpayers pushed into higher tax brackets without an actual increase in income.
NEW TAX BRACKETS
△ 7% FOR EACH INCOME BRACKET
| Tax brackets for single taxpayers | 2022 Income | 2023 Income |
| 10% | $0—$10,275 | $0—$11,000 |
| 12% | $10,275—$41,775 | $11,000—$44,725 |
| 22% | $41,775—$89,075 | $44,725—$95,3755 |
| 24% | $89,075—$170,050 | $95,3755—$182,100 |
| 32% | $170,050—$215,950 | $182,100—$231,250 |
| 35% | $215,950—$539,900 | $231,250—$578,125 |
| 37% | $539,900+ | $578,125+ |
There has also been a change in the tax brackets for Married Couples and Head Of Household.
Conclusion: You may end up saving money because of the new changes, depending on whether your income has increased as a result of inflation. A married couple filing jointly making $88,000 would be taxed at 22%, while in 2023 they will only be taxed at 12%, which allows the family to keep more of their money. If you are an individual and were to pay 22% tax on your income in the year 2022 because your income was between $41, 775—$44,724. After the new tax bracket changes, you will not be required to pay 22% of your income tax. Because you will now be in a new tax bracket and only have to pay 12 % of your income as income tax to the government.
