Yes, inflation is driving up prices significantly, but it could also have an impact on your income next year.
Your tax burden may be reduced by the IRS's inflation adjustments for the federal tax income brackets for 2023.
According to Mark Luscombe, chief federal tax analyst for Wolters Kluwer Tax & Accounting, "it is very likely that you would see more in your paycheck starting in January [due to the IRS inflation adjustments, which] tend to result in lower withholding for a given level of income,"
Of course, the modifications begin in 2023 and have no impact on your taxes in 2022.
Starting next year, below are the amounts of income that will apply to each rate:
10% applies to the first $11,000 of income for single filers ($22,000 for married couples filing jointly).
12% applies to income over $11,000 ($22,000 for joint filers)
22% applies to income over $44,725 ($89,450 for joint filers)
24% applies to incomes over $95,375 ($190,750 for joint filers)
32% applies to incomes over $182,100 ($364,200 for joint filers)
37% applies to incomes over $578,125 ($693,750 for joint filers)
The standard deduction that most filers claim, will go from $12,950 to $13,850 for single filers and $27,700 (up $1800) for married couples filing jointly.
How will these changes impact you?