In order to better reflect the fast pace of inflation, the Internal Revenue Service has announced income thresholds will be higher in 2022.
The change in thresholds will require a married couple to earn almost $20,000 more next year to enter the top tax bracket, which has a tax rate set at 37%, CBS News reported.
It is common for the IRS to adjust tax brackets each year, accounting for the rise in consumer prices. However, the increases this year are more than in years past.
Although the brackets may be seeing a shift, Congress's basic income tax rates under the Tax Cuts and Jobs act set in 2017 will not see a change. The lowest threshold will stay at 10% and the highest at 37%.
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Other thresholds will also be adjusted to reflect inflation, the IRS reported. For example, thresholds like the standard deduction for married couples will see a 3.2% rise to $25,900 next year. But despite the change, it will not match the pace of inflation which is the highest it's been in two decades.
The new tax bracket thresholds will see about a 3% increase after they were closer to 1% last year.
The thresholds for the seven U.S. tax brackets in 2022 are:
-10% tax bracket: single individuals earning up to $10,275 and married couples filing jointly earning up to $20,550.
-12% tax bracket: single filers earning more than $10,275 and married couples filing jointly earning over $20,550.
-22% tax bracket: single filers earning more than $41,775 and married couples filing jointly earning over $83,550.
-24% tax bracket: single filers earning more than $89,075 and married couples filing jointly earning over $178,150.
-32% tax bracket: single filers earning more than $170,050 and married couples filing jointly earning over $340,100.
-35% tax bracket: single filers earning more than $215,950 and married couples filing jointly earning over $431,900.
-37% tax bracket: single filers earning more than $539,900 and married couples filing jointly earning over $647,850.
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