The important "trigger" income levels for 2022

Gumby

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CORRECTED TO POST # 3 BELOW


Similar to what I did for the last two years, here is a list of important “trigger” income levels for 2022.

Numbers are actual AGI/MAGI (i.e. - before standard or itemized deductions) unless indicated as Taxable Income by an asterisk * which means you can add $25,900 MFJ/$12,950 single if you use the standard deduction (+ another $1400 per person over 65 or blind if MFJ/ $1750 if over 65 or blind single). Note also that MAGI and AGI are often not the same in different sections of the tax code. If you are close to one of the limits, ensure you know what is and is not included in income for that particular limit. This thread is a good example of how important it is to know precisely what counts in MAGI for your particular issue. https://www.early-retirement.org/for...-a-108104.html

I have put social security taxation levels in a separate post (here https://www.early-retirement.org/fo...-income-levels-2021-a-106300.html#post2506932), because it is a little complicated (not too bad) and highly dependent on exactly how much social security you receive. (This links to the 2021 thread, Post #2).

This is based on current law; there may be changes. As with the last two years, this is a collaborative effort, so if you have corrections or additions, please post them here and I will adjust this first post as necessary.

Link to 2021 thread is here - https://www.early-retirement.org/forums/f28/the-important-trigger-income-levels-2021-a-106300.html


Income level/effect (as of 1/1/2022) This for Married Filing Jointly. Numbers for single taxpayers are listed separately below.

$20,551* - 12% marginal tax bracket for ordinary income

$39,120 - maximum two people collecting Social Security prior to FRA can earn ($19,560 each) in W-2 income before Social Security is reduced

$41,001 – Savers Credit drops from 50% to 20%

$44,001 – Savers Credit drops from 20% to 10%

$68,001 – Savers Credit eliminated

$69,680 - 400% FPL -- ACA subsidy reduced to the point where premium can be 9.61% of income (Household of two, Lower 48)(note that ACA subsidy levels are based on the prior year’s poverty levels)

$83,351* - Long term capital gains taxed at 15%

$83,551* - 22% marginal tax bracket for ordinary income.

$109,001 - begin limiting traditional IRA deduction amounts (if you have a retirement plan at work)

$129,001 - no traditional IRA deductions allowed (if you have a retirement plan at work)

$145,001 - Student loan interest deduction (up to $2500) phaseout begins

$160,001 - Begin phaseout of American Opportunity Tax Credit (AOTC) and Lifetime Learning Credit (LLC) for college costs (note that this is not indexed for inflation)

$175,001 - Student loan interest deduction ends

$178,151* - 24% tax bracket

$180,001 - AOTC/LLC are eliminated

$182,001 - IRMAA Medicare surcharge begins (based on income two years prior. i.e. 2020 income)

$204,001 - begin limiting Roth contribution amounts

$214,001 - no Roth contributions allowed (consider backdoor Roth)

$228,001 - IRMAA level 2 surcharge

$250,001 - NIIT 3.8% surcharge (note this is not indexed for inflation)

$284,001 - IRMAA level 3

$340,001 - IRMAA level 4

$340,101* - 32% tax bracket

$431,901* - 35% tax bracket

$517,201* - 20% long term capital gains rate

$647,851* - 37% tax bracket



Income level/effect (as of 1/1/2022) This is for Single Filers vv. Numbers for Married Filing Jointly are listed separately above ^^.

$10,276* - 12% marginal tax bracket for ordinary income

$19,560 - maximum a single person collecting Social Security prior to FRA can earn in W-2 income before Social Security is reduced

$20,501 – Savers Credit drops from 50% to 20%

$22,001– Savers Credit drops from 20% to 10%

$34,001 – Savers Credit eliminated

$41,676* - Long term capital gains taxed at 15%

$41,776* - 22% marginal tax bracket for ordinary income.

$51,520 - 400% FPL -- ACA subsidy reduced to the point where premium can be 9.61% of income (household of 1, Lower 48)

$68,001 - begin limiting traditional IRA deduction amounts. (if you have a retirement plan at work)

$70,001 - Student loan interest deduction (up to $2500) phaseout begins

$78,001 - no traditional IRA deductions allowed. (if you have a retirement plan at work)

$80,001 - Begin phaseout of American Opportunity Tax Credit (AOTC) and Lifetime Learning Credit (LLC) for college costs (note that this is not indexed for inflation)

$85,000 - Student loan interest deduction ends.

$89,076* - 24% tax bracket

$90,001 - AOTC/LLC are eliminated

$91,001 - IRMAA Medicare surcharge begins (based on income two years prior. i.e. 2020 income)

$114,001- IRMAA level 2 surcharge

$129,001 - begin limiting Roth contribution amounts

$142,001 - IRMAA level 3

$144,001 - no Roth contributions allowed (consider backdoor Roth)

$170,001 - IRMAA level 4

$170,051* - 32% tax bracket

$200,001 - NIIT 3.8% surcharge (note this is not indexed for inflation)

$215,951* - 35% tax bracket

$459,751* - 20% long term capital gains rate

$500,001 - IRMAA level 5

$539,901* - 37% tax bracket

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Just a note to your very helpful post - Those of us age 65 and over get an additional standard deduction of $1400 each = $2800 for MFJ.
 
Just a note to your very helpful post - Those of us age 65 and over get an additional standard deduction of $1400 each = $2800 for MFJ.
Single filers 65 and over get $1750 additional for the standard deduction (rather than $1400).
 
Gumby: Your link to Social Security changes comes up as Invalid Page Specified.

- Rita
 
The second link in Post 1 of this thread links to the the second post in last year's thread. It just tells you how to calculate the amount of your social security subject to taxation. That has not changed, because there are no inflation adjustments. As I mentioned last year, it is a creeping tax increase on social security recipients. I have tinkered around with it to make sure the link works. If it still doesn't work for you, let me know and I'll try something else.
 
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Thanks for the extremely helpful post Gumby.
This, like last year's, makes my life easier.
 
You might want to add in EIP3 income phaseout starts. It's at $150K MFJ, and $75K single:
https://www.irs.gov/newsroom/calculating-the-economic-impact-payment

And it doesn't apply to me so I don't personally care, but some people may be interested in the child tax credit phase outs if they have dependent kids age 17 or under. It looks like there is an initial phase out starting at $150K MFJ / $75K single, then a second phase out at $400K MFJ / $200K single: https://smartasset.com/taxes/all-about-child-tax-credits
 
You might want to add in EIP3 income phaseout starts. It's at $150K MFJ, and $75K single:
https://www.irs.gov/newsroom/calculating-the-economic-impact-payment

And it doesn't apply to me so I don't personally care, but some people may be interested in the child tax credit phase outs if they have dependent kids age 17 or under. It looks like there is an initial phase out starting at $150K MFJ / $75K single, then a second phase out at $400K MFJ / $200K single: https://smartasset.com/taxes/all-about-child-tax-credits

I'm unaware of an EIP payment for Tax Year 2022, which is the topic of this particular post. Nor has one been approved based on 2021 income to be received or credited in 2022. The first two were based on 2018 or 2019 income, the third was based on 2020 income. I know there have been calls for a 4th stimulus check, but so far no action on that. And I suspect it would be based on 2021 income. If that should occur, I'll update last year's post, which is for 2021 income.

Also, while the Build Back Better bill, which continues the CTC in 2022, has passed the House, it is currently unknown whether it will pass the Senate. If it does, I will add the limits to this years post. (I went back and added them for the Tax Year 2021 post)
 
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I'm unaware of an EIP payment for Tax Year 2022, which is the topic of this particular post. Nor has one been approved based on 2021 income to be received or credited in 2022. The first two were based on 2018 or 2019 income, the third was based on 2020 income. I know there have been calls for a 4th stimulus check, but so far no action on that. And I suspect it would be based on 2021 income. If that should occur, I'll update last year's post, which is for 2021 income.

Also, while the Build Back Better bill, which continues the CTC in 2022, has passed the House, it is currently unknown whether it will pass the Senate. If it does, I will add the limits to this years post. (I went back and added them for the Tax Year 2021 post)

On EIP, the one I was thinking about was EIP3, which is for tax year 2021. You're right that it doesn't belong in this 2022 thread, and probably most people have already received it earlier in the year based on their 2020 or 2019 tax returns, but it could in theory benefit some people. You might consider adding the thresholds to the 2021 thread (they don't appear to be there yet).

And ditto on the CTC; I was thinking about tax year 2021. Thanks for adding those to that thread.

(And thanks in general for maintaining both of these threads. I think they're a great idea!)
 
On EIP, the one I was thinking about was EIP3, which is for tax year 2021. You're right that it doesn't belong in this 2022 thread, and probably most people have already received it earlier in the year based on their 2020 or 2019 tax returns, but it could in theory benefit some people. You might consider adding the thresholds to the 2021 thread (they don't appear to be there yet).

And ditto on the CTC; I was thinking about tax year 2021. Thanks for adding those to that thread.

(And thanks in general for maintaining both of these threads. I think they're a great idea!)

The third EIP payment (the $1400 one), while received in 2021, was based on 2020 income, so the income thresholds are in my year 2020 post (which was actually posted in December 2019). My intention has been to put all the limits in the post for the income year to which they apply, not the subsequent year when you file the taxes. So the limits in this most recent post are for income received in 2022. I wanted to be forward looking so that people can plan for the year ahead.
 
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The third EIP payment (the $1400 one), while received in 2021, was based on 2020 income, so the income thresholds are in my year 2020 post (which was actually posted in December 2019). My intention has been to put all the limits in the post for the income year to which they apply, not the subsequent year when you file the taxes. So the limits in this most recent post are for income received in 2022. I wanted to be forward looking so that people can plan for the year ahead.

I get what you're saying in general, and I agree with the approach of putting things into the proper tax year. But I have a quibble:

The EIP3, while advanced to people based on their 2020 (or in some cases their 2019) tax return, was actually an advance credit applicable to tax year 2021. See ARP Act Section 9601 (page 136 at https://www.congress.gov/117/plaws/publ2/PLAW-117publ2.pdf)

Most people, including me and probably most people here, received the full EIP3 already and are not eligible for any additional EIP3 on our tax returns that we'll start filing in a few months. So for us, line 30 on our 2021 1040 will be a NOP.

There may, however, be some people (I can imagine for example a high income couple who retired this year) who are still income tax planning for 2021 and might want to get their 2021 income under $150K in order to get the EIP3 with their tax return, having not been eligible based on their 2019/2020 tax returns.

(Feel free to move this whole discussion to the 2021 thread if you think it's worth it.)
 
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Point well taken. I have copied your post to the 2021 thread. Thanks.
 
Gumby, thanks very much! As Earth, Wind & Fire would say, "You're a Shining Star..." :cool:
 
Gumby, thanks very much! As Earth, Wind & Fire would say, "You're a Shining Star..." :cool:
"No matter who you are. Shining bright to see ..."

Thanks for that.
 
Thanks Gumby! Great work!

Not that it would impact many of us, but isn't there a tier 5 IRRMA level that begins at $750k (for couples)?

https://www.medicareresources.org/m...income-related-monthly-adjusted-amount-irmaa/

Table 1. Part B – 2022 IRMAA
Individual Joint Monthly Premium
$91,000 or less $182,000 or less $170.10
> $91,000 – $114,000 > $182,000 – $228,000 $238.10
> $114,000 – $142,000 > $228,000 -$284,000 $340.20
> $142,000 – $170,000 > $284,000 – $340,000 $442.30
> $170,000 – $500,000 > $340,000 – $750,000 $544.30
Greater than $500,000 Greater than $750,000 $578.30
 
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Forgive me for asking but I've not been following this too well.
Could someone please tell this clueless person, what is a "trigger income" and what does it trigger?
 
Forgive me for asking but I've not been following this too well.
Could someone please tell this clueless person, what is a "trigger income" and what does it trigger?

It's just the various income levels where important tax things happen. For people who are able to manage their taxable income and AGI, it's good to be aware of them so one can manage their income to either acquire the good thing (such as a tax credit), or avoid a bad thing (such as a higher tax bracket).
 
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