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Income tax deductions for the 2022 tax year
Reduce the taxes you owe through tax deductions and credits on eligible expenses.
A tax deduction or tax credit can help you keep more of your money in your own pocket come tax time. Each directly reduces the amount of taxes you owe, though in different ways. Talk with a tax professional or choose tax software to maximize the eligible deductions you qualify for — and to lower what you owe for the 2022 tax year due Tuesday, April 18, 2023.
What is a tax deduction?
A tax deduction is an amount that you can deduct or subtract from your taxable income. The IRS describes a tax deduction as a deduction that lowers the amount of your income before you calculate the tax you owe.
When you hear the term “tax write-off,” it typically refers to a tax deduction.
Eligible taxpayers filing for the 2022 tax year may be eligible for:
- Work-related deductions — more commonly called business expenses.
- Itemized deductions — including property taxes, charitable contributions or mortgage interest.
- Education deductions — student loan interest, work-related educational expenses or teacher educational expenses.
- Healthcare deductions — medical expenses, dental expenses and health savings accounts (or HSAs).
- Investment-related deductions — including IRAs, capital losses and forgiven debt due to foreclosures.
What is a tax credit?
A tax credit is like a payment toward the taxes you owe, reducing your tax bill dollar for dollar. A credit can also increase your tax refund, whether you owe taxes or not.
For example, if you’re eligible for a tax credit of $500 for child care expenses, then your tax bill will be reduced by exactly $500.
Eligible taxpayers filing for the 2022 tax year may be eligible for:
- Family or dependent credits — including the Child Tax Credit, Child and Dependent Care Credit and Earned Income Credit.
- Income and savings credits — including the Saver’s Credit, Foreign Tax Credit or credits for the prior year’s minimum tax.
- Homeowner credits — taxes and residential energy costs for homeowners.
- Electric vehicle credits — reductions under the Inflation Reduction Act of 2022.
- Healthcare credits — or the Premium Tax Credit.
Refundable and nonrefundable credits
There are two major types of tax credits: refundable and nonrefundable.
Refundable credits provide you with cash back if the credit reduces your tax bill to $0 and there’s still money left over. Nonrefundable tax credits reduce your tax bill by the amount owed, providing no refund if your bill is reduced to $0. For example, if you owe $500 but your tax credit is worth $1,000, you don’t receive a refund for the extra $500.
Standard deductions vs. itemized deductions
US taxpayers have the choice between taking standard deductions or itemizing deductions on their 2022 tax return. The difference comes down to whether you’re better off taking the standard fixed amount available to you as a deduction or listing out in detail what you actually spent on eligible deductible expenses.
Should I itemize or take the standard deduction?
The IRS advises itemizing your deductions if the amount you’re eligible to deduct based on your actual expenses totals more than the standard deductions.
Start by understanding the amount of your standard deductions you’re eligible for. The IRS provides an online tool that walks you through determining your standard deductions.
Then work out your total deductions by itemizing — or listing out — your mortgage interest, property taxes, state income or sales tax, charitable contributions, medical expenses and other eligible expenses.
If the total of your itemized deductions is more than the standard deduction, you may save more money on taxes by itemizing your expenses on your tax return.
Standard deductions for the 2022 tax year
| Tax filing status | 2022 standard deduction | Change from 2021 tax year |
|---|---|---|
| Married filing jointly | $25,900 | $800 more than 2021 tax year |
| Head of household | $19,400 | $600 more than 2021 tax year |
| Single | $12,950 | $400 more than 2021 tax year |
| Married filing separately | $12,950 | $400 more than 2021 tax year |
15+ popular tax credits and deductions for individuals
You’ll find many tax credits and deductions available to eligible taxpayers. Confirm eligibility directly with the IRS or through the services of a tax professional.
Popular credits for the 2022 tax year
| Credit type | Eligibility | Average credit for 2022 tax year |
|---|---|---|
| Earned income tax credit | $560 to $6,935 | Depends on 2022 adjusted gross income, filing status and number of claimed dependents |
| Child and dependent care credit | $3,000 per dependent up to $6,000 | Parents, guardians or caretakers for qualifying dependent children ages 0 to 12 or an incapacitated spouse or parent |
| Child tax credit | Up to $2,000 per child | Parents or guardians or qualifying children ages 0 to 16 |
| Adoption tax credit | Up to $14,890 toward adoption costs, depending on your adjusted gross income | Adoptions finalized in 2022 |
| Saver’s credit | Depends on multiple factors | Eligible 2022 contributions to an IRA or ABLE |
| Electric vehicle tax credit | Up to $7,500, depending on your car’s battery size | New electric or plug-in vehicles purchased in 2022 |
| American opportunity tax credit | 100% of the first $2,000 spent on tuition, books, fees and other eligible costs and 25% of the next $2,000 spent — up to a lifetime credit of $2,500 | Eligible undergraduates and their parents who have not claimed the lifetime learning credit |
| Lifetime learning credit | 20% of the first $10,000 spent on tuition, books, fees and other eligible costs — up to $2,000 | Eligible undergraduates, graduates and vocational students who have not claimed the American opportunity tax credit |
Popular deductions for the 2022 tax year
| Deduction type | Eligibility | Average deduction for 2022 tax year |
|---|---|---|
| State and local taxes | Up to $10,000 (or $5,000 if you’re married and filing separately) | Itemized state and local income or sales tax |
| Personal property tax | Up to $10,000 (or $5,000 if you’re married and filing separately) | Itemized real estate, cars, boats, planes and land taxes |
| Charitable contributions | Depends on your donation amount | Qualified contributions to charitable and nonprofit organizations itemized on your return |
| Gambling loss deduction | Depends on your losses | Qualified gambling losses up to the amount of your winnings claimed and itemized on your return |
| Mortgage interest deduction | Depends on mortgage tax amount | First $750,000 of your eligible mortgage debt itemized on your return |
| Student loan interest | Up to $2,500 | Interest paid on your student loan |
| Teacher educational expenses | Up to $300 — or $600 if married and filing jointly | Unreimbursed classroom expenses |
| Medical and dental expenses | Depends on amount | Medical and dental expenses that exceed 7.5% of your adjusted gross income |
| Health savings account contributions | Up to $3,650 for individual plans or up to $7,300 for family plans | 100% of your health savings contributions from the income you pay taxes on |
| IRA contributions | Full or partial deduction for contributions | Depends on your income and whether you or a spouse had access to an employer-sponsored retirement plan |
| Capital losses | Up to $3,000 — or $1,500 if married and filing separately | Capital losses that were more than your capital gains |
How do income tax deductions work in the US?
Your taxable income is the total amount of money you’ve earned that you’re required to pay taxes on. When you claim an expense as a tax deduction, you’re lowering your taxable income and so reducing the amount of tax you’re legally required to pay.
The US uses a system of tiered and progressive tax brackets, with your bracket depending on your total taxable income. In theory, the more money you make, the more taxes you’re required to pay.
Taxable income table for 2022
Here’s what the tax rates look like for single or married individuals filing separately.
| Taxable income | Tax on this income |
|---|---|
| $0 to $10,275 | 10% of taxable income |
| $10,276 to $41,775 | $1,027.50 + 12% of the amount over $10,275 |
| $41,776 to $89,075 | $4,807.50 + 22% of the amount over $41,775 |
| $89,076 to $,170,050 | $15,213.50 + 24% of the amount over $89,075 |
| $170,051 to $215,950 | $34,647.50 + 32% of the amount over $170,050 |
| $215,951 to $539,900 | $49,335.50 + 35% of the amount over $215,950 |
| $539,901 or more | $162,718 + 37% of the amount over $539,900 |
What are above-the-line deductions?
Above-the-line deductions are expenses you subtract before calculating the adjusted gross income (AGI). Common deductions include educator expenses, student loan interest, the HSA deduction and the IRA deduction. Below the AGI line are the standard deduction and itemized deductions.
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Bottom line
Income tax deductions are designed to lessen the burden of taxes you owe to the government. You may be eligible for work-related, healthcare, education, investment-related and other tax deductions and credits, depending on your filing status. Talk with an accountant or tax professional, or work with trusted tax software that can guide you through filing your income tax return.
- Credits and reductions for individuals, IRS
- Expanded tax benefits help individuals and businesses give to charity during 2021, IRS
- IRS provides tax inflation adjustments for tax year 2022, IRS
- With new SALT limit, IRS explains tax treatment of state and local tax refunds, IRS, March 29 2019
- Topic No. 501 Should I itemize?, IRS
- Topic No. 502 Medical and Dental Expenses, IRS
- Topic No. 503 Deductible Taxes, IRS, October 5 2022
- 2022 Instructions for Schedule 8812, IRS
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