There Are a Few Changes for the 2022 Tax Season That Individuals and Businesses Should Be Aware Of:
Increase in the standard deduction: The standard deduction for the tax year 2022 has increased for all filing statuses. For example, the standard deduction for single filers will be $12,550, up from $12,200 in 2021.
Changes to itemized deductions: The Tax Cuts and Jobs Act (TCJA) made changes to itemized deductions starting in 2018. For the tax year 2022, the State and Local Tax (SALT) deduction is limited to $10,000. Additionally, the mortgage interest deduction limit is reduced to $750,000 for mortgages taken out after December 15, 2017.
Increased child tax credit: The child tax credit for the tax year 2022 has increased to $3,000 per child under age 17, up from $2,000 in 2021.
Extension of certain COVID-related tax breaks: Some tax breaks that were put in place to help individuals and businesses during the COVID-19 pandemic have been extended for tax year 2022. For example, the employee retention credit and the paid sick and family leave credit have both been extended.
Changes to the earned income credit: The earned income credit has been expanded for the tax year 2022, with higher income limits and larger credit amounts for families with three or more children.
It is important to note that these changes may be subject to change based on legislative actions. It’s always best to consult with a tax professional for the most accurate and up-to-date information.