State Tax Law Changes for 2022

 

Alabama

• Optional standard deduction is changed as follows:
  • AGI income floor is increased for single, married filing joint, or head of household to $25,500 and $12,750 for married filing separate.
  • Standard deduction is increased as follows:
    • Married filing jointly – Minimum: $5,000; Maximum: $8,500
    • All other filing status’ – Minimum: $2,500; Maximum: $4,250
• Income threshold for the maximum dependent exemption is increased to $50,000.
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Arkansas

• The top individual income tax rate has been reduced to 5.5%.
• Low-income and middle-income tax tables have been consolidated.
• Added an up to $60 nonrefundable credit for low-income individuals. The maximum income to receive the credit is $24,700.
• Standard deduction will begin to be adjusted for inflation each year.
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Arizona

• Individual income tax rates are now: 2.55% (Taxable income under $27,272); 2.98% (Taxable income $27,273 – $250,000); 4.5% for taxable income over $250,000.
• New Pass-Through Entity Tax
  • Partnerships and S Corporations may elect to pay a 4.5% flat tax on their Arizona business taxable income.
  • The election must be made on an annual basis. Partners or shareholders may opt-out of the election.
  • Read more

California

• The tentative minimum tax limitation was eliminated when calculating the tax for a Pass-Through Entity that elects to be taxed at the entity level. This is both for the tax and the PTE credit. This change is retroactive to Tax Year 2021.
• For the Pass-Through Entity Tax, the following now applies (retroactive to 2021):
  • Qualified net income for calculating the tax now includes a qualified taxpayer’s guaranteed payments received from the entity.
  • A partnership now qualifies as a direct owner.
  • Read more

For the complete list of all States and their most important tax law changes for 2022, click here or on the button below.