2022 Tax Limits: What to Expect
With 2022 right around the corner, several increased income/tax limits have been released that may affect you. Below are the highlights:
Qualified Retirement Plan Limits (401(k), 403(b), 457, etc.)
Employees who participate in these plans will find that the annual deferral limit has been increased to $20,500 (up from $19,500). Age 50+ catch-up deferrals will continue at the same $6,500 limit.
Roth IRA Contribution Income Limits:
Individuals are able to make direct & full Roth IRA contributions if Adjusted Gross Income (AGI) is below a certain threshold. Additionally, the amount you can directly contribute is phased out after a certain AGI level. Below are the 2022 income thresholds:
- $129,000 to $144,000 - Single taxpayers and heads of household
- $204,000 to $214,000- Married, filing jointly
- $0 to $10,000 - Married, filing separately
For 2022, the Roth IRA/Traditional IRA contributions limits will remain unchanged at $6,000/yr. Age 50+ contributions also remain unchanged at $1,000/yr. as well.
Social Security Wage Cap
The Social Security Administration announced that the wage base for calculating the Social Security tax would be increased to $147,000 in 2022 (up from $142,800).
The Centers of Medicare & Medicaid Services (CMS) announced the 2022 premiums for Medicare along with the 2022 Medicare Income-Related Monthly Adjustment Amount (IRMAA) for high-income beneficiaries. Medicare part B enrollees will find that 2022 monthly premiums have increased to $170.10 (up from $148.50). Below is a helpful chart to understand what additional premiums may be if you have high-income:
More information about IRMAA can be found in our earlier blog here.
2022 Tax Brackets
Although there is no official news from Congress regarding the proposed tax brackets, one should be aware of potential changes coming in 2022. Below is the proposed change for tax brackets (including the return of the 39.6% bracket):
More information about these changes can be found in an earlier blog here.
With many changes along the horizon, it can be daunting to keep up with all this information. Consulting with a fee-only financial advisor can ease the stress of handling all of this yourself.
Weingarten Associates is an independent, fee-only Registered Investment Advisor in Lawrenceville, New Jersey serving Princeton, NJ as well as the Greater Mercer County/Bucks County region. We make a difference in the lives of our clients by providing them with exceptional financial planning, investment management, and tax advice.