Every fall, the IRS announces changes to certain key financial figures for the upcoming year, based on the Consumer Price Index as of September 30. Here are a few of the highlights:
The elective deferral (contribution) limit for employees who participate in 401(k), 403(b), and most 457 plans has increased by $1,000 to $20,500. The “catch-up” adjustment for those over age 50 remains unchanged at $6,500. The total limit for those over age 50 in 2022 will be $27,000.
The contribution limits for Traditional and Roth IRAs remains unchanged at $6,000. The “catch-up” adjustment for those over age 50 also remains at $1,000, thus making the total contribution limit to be $7,000 for those over age 50.
The Social Security Administration announced there will be a 5.9% increase in Social Security benefits for 2022. The maximum amount of earnings subject to Social Security tax also will increase to $147,000.
The maximum Social Security benefit for a worker retiring at full retirement age in 2022 will be $3,113 per month.
The IRS also announced that the basic Federal exclusion amount for decedents who die in 2022 will increase to $12,060,000 ($11,700,000 in 2020). The annual exclusion for gifts for 2022 will increase to $16,000.
On November 12, the Centers for Medicare and Medicaid Services announced that the Part B Medicare premiums will be increasing $21.60 to $170.10 for 2022. The annual deductible for Medicare Part B beneficiaries is increasing $30 from $203 to $233.
Contact an Access Wealth advisor to discuss how these numbers impact your tax planning strategies.
*This article is updated each year to reflect the most recent numbers.