Broker Check

2023 TAX PLANNING

                                                                                        

Medicare

Medicare accounted for $696.5 billion, or 10% of the budget, in 2021.


Defense Spending

Another $754.8 billion, or 11% of the budget, was paid for defense and security-related international activities.

The bulk of the spending in this category reflects the underlying costs of the Defense Department. This includes the cost of multiple defense initiatives and related activities, described as Overseas Contingency Operations in the budget.


Social Security

Seventeen percent of the budget, or $1.1trillion, was paid for Social Security, which provided monthly retirement benefits averaging $1,497 to 46 million retired workers. Social Security also provided benefits to 3 million spouses and children of retired workers, 6 million surviving children and spouses of deceased workers, and 10 million disabled workers and their eligible dependents.

THE  TAX  BRACKETS

The tax brackets are: 10%, 12%, 22%, 24%, 32%, 35%, and 37%.

2022 TAX RATE      SINGLE  MARRIED FILING JOINTLY
10%   $0 to $10,275      $0 to $20,550
12%  $10,276 - $41,775      $20,551 - $83,550
22%  $41,776 - $89,075      $83,551 - $178,150
24%  $89,076 - $170,050      $178,151- $340,100
32%  $170,051 - $215,950      $340,101 - $431,900
35%  $215,951 - $539,900      $431,901 - $647,850
37%  $539,901+      $647,851+

These modest changes to the tax brackets also mean that wage earners may fall into lower brackets. Here is one example. A single filer at $88,000 in taxable income would have fallen into the 24% bracket for tax year 2021. The filer would now be in the 22% tax bracket for 2022.

These new rates are scheduled to expire in 2025 unless Congress acts to make them permanent. Exemptions also changed under the new tax code.

Keep in mind that the tax brackets are representative of how much you will pay for each portion of your income. For example, if you make $100,000 for the 2022 tax year and are married filing jointly, you would pay 10% on the first $20,550, 12% on the next $63,000, and 22% on the final $16,450. You would not pay 22% for the entire $100,000 of your annual income.


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