Tax Law Changes for 2022

Federal Tax Changes

The bottom line on many tax returns will be very different this year because most of the emergency Covid provisions have expired. A majority of taxpayers will see smaller refunds or higher tax bills, with the biggest hit affecting taxpayers with children.

The following Covid-era provisions have expired:

  • The expanded and advanced child tax credit is no more. The credit reverts to the 2020 level, and only a portion of it is refundable.

  • The higher credit for child and dependent care expenses is also gone. The 2020 limits are back in effect.

  • Most (but not all) of the expanded provisions for the Earned Income Tax Credit have also expired. This means the maximum credit is reduced and the age limit is reinstated (you can no longer claim the credit if you are over 65 or under 25).

  • The sick and family leave credit for self-employed people has expired.

  • The $300 per person deduction for charitable contributions has also been eliminated. You can only deduct donations if you itemize.

  • There was no stimulus (also known as the recovery rebate credit) in 2022.

  • The itemized deduction for private mortgage insurance has been dropped, though there is some talk in Congress of reinstating it. Stay tuned.

While most Covid-era provisions have expired, some remain, including tax advantages for forgiveness of student debt and your main home debt, residential energy credits, and emergency education grants.

The standard deductions have increase for 2022 as follows:

  • For single taxpayers, it will be $12,950 ($14,700 if over 66 or blind).

  • For Head of Household, it will be $19,400 ($21,150 if over 65 or blind).

  • For couples filing jointly and Qualifying Surviving Spouses it is $25,900 ($28,700 if both taxpayers are over 65 or blind).

Other changes of note:

  • The standard mileage rates were raised in the second half of the year, which will make reporting for those who use a car for business or medical care more complicated. For business use, the rate went from 58.5 to 62.5 cents per mile on July 1. For medical deductions when itemizing, it went from 18 to 22 cents per mile. There was no change in the mileage rate for use of a car for charity. You should be keeping good records or your mileage use and have a breakdown of the two parts of the year for your tax preparer. Do not worry about computing the cost; all we need is the number of miles driven in each half of the year.

  • The deduction for educators who purchase classroom supplies and materials has increased to $300 on the federal return, with up to $250 more on the Maryland return for those who spent more than $300. Covid protection supplies (masks, sanitizer, etc.) are allowable expenses.

Maryland Tax Changes

  • There were very few changes in Maryland tax law, apart from a new credit for those 65 and over. If your federal adjusted gross income was $75,000 or less ($150,000 if married filing jointly), you will get a credit of $1,000 for singles and $1,750 for couples.

  • Also if you have reached the age of 100, the first $100,000 of your income will not be taxed.