Tax filing season comes with changes for taxpayers
WASHINGTON (Gray DC) - A combination of new rules from the Inflation Reduction Act and a phasing out of tax policies from the heart of the coronavirus pandemic could mean the options to receive the largest return may change for taxpayers.
Holiday spending often has Americans thinking about how much money is leaving their bank accounts, but it’s also time to think about how changes to tax laws can put money back into their wallets.
Turbotax said tax brackets will be slightly increased to adjust for inflation and the standard deduction is increasing.
“The standard deduction for tax year 2022, if you’re single, it increased to $12,950,” TurboTax certified public accountant Lisa Greene-Lewis said.
Not all changes will save you money. Increased tax credits under the ‘American Rescue’ plan are reverting to normal, including the Earned Income Tax Credit, child independent care credit and the child tax credit.
“The child tax credit will go back to a credit of $2,000,” Greene-Lewis said. “Under the American Rescue Plan it was up to $3,600 for your child under six.”
New tax credits under the Inflation Reduction Act will lower the price of certain clean energy items such as solar panels and some cars. The Tax Policy Center, part of the Brookings Institute, said that could impact newer consumer purchases.
“Their furnace goes out, they need to buy a new furnace, and they have a choice between say a heat pump or another kind of furnace that doesn’t qualify, the tax credit makes it cheaper to buy the more efficient type,” Senior Tax Policy Center fellow Ben Page said.
The Tax Policy Center said on average, people will pay more in taxes for 2022, but they do not predict a major impact on the economy.
“Their taxes will be higher,” Page said. “That will tend to reduce spending. I just don’t think that it will be a very significant effect.”
Tax brackets will be increased by a record amount for the upcoming 2024 filing season as the government adjusts for inflation.
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