Sometimes good news is really bad news.
Each year, the IRS redoes income tax thresholds to account for inflation and this year, the thresholds went up significantly. That means many middle-class taxpayers who might have been in the 32% bracket will instead be taxed at a 24% rate. And the standard deduction will increase by $1,300 for single filers and $2,600 for couples filing jointly.
But here’s the bad news.
The agency is increasing the thresholds for the tax brackets by just seven percent, even though inflation is increasing at an 8.2% annual rate. So in real dollars, some will actually be boosted into a higher tax bracket.
And that seven percent won’t do much to help with prices surging for some key goods and services:
- Butter and eggs: up 31%
- Health insurance: up 28%
- Energy costs: up 20%
Mathematical adjustments are stopgap quick fixes to the raging crisis of inflation. Are you as concerned as we are? Join the No Labels movement.
