Should I File a Home Insurance Claim? Pros, Cons, When It Makes Sense

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You love the big cherry tree in your home’s front yard. Each spring, it explodes in a riot of bright pink flowers. Each summer, it drops sour fruit that perks up nicely in a sugary pie. 

Until it doesn’t. One summer day, your family comes home to find one of the cherry tree’s limbs in your living room, felled by a strong thunderstorm. The damage is extensive: two broken windows, a caved-in window sill, and serious water and impact damage to the living room floor and furniture.  

Once the initial shock wears off, you prepare to file a home insurance claim. But then, you start to ask questions. What if your insurance company denies the water damage portion of the claim? What if my home insurance premiums spike? How much will I have to pay out of pocket due to your policy’s high deductible? Should I even file this claim? 

Should I File a Home Insurance Claim?

The fact that a seemingly serious event like a tree falling through your house is such a close call teaches us an important lesson about homeowners insurance: It’s not always in your best interest to file a claim. Even when they cause short-term financial pain, some incidents aren’t worth filing over. 

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Plus, standard homeowners insurance policies exclude certain types of incidents that can cause serious financial stress for homeowners, such as floods and earthquakes. You need separate insurance policies if your home is at risk of these uncovered perils.

Pros & Cons of Filing a Homeowners Insurance Claim

If you’re considering filing a homeowners insurance claim, you’re probably facing a hefty bill for cleanup and repairs or a long list of damaged items to replace. Or perhaps you’re staring down a lawsuit brought by a guest or worker who sustained serious injuries on your property.  

In any case, you need to figure out whether it makes sense to go through with your claim — and fast. That means objectively assessing the pros and cons of doing so.

Pros of Filing a Home Insurance Claim

Depending on the circumstances, filing a home insurance claim has significant financial benefits.

  1. It Helps You Pay for Repairs. If your claim is approved, you can use the payout to offset the cost of repairs and restore your home to its previous condition. Without this financial assistance, you might find yourself cutting corners or making ill-advised financial moves to cover the cost, such as dipping into your 401(k). 
  2. It Helps You Replace Damaged or Stolen Goods. Your homeowners insurance policy could help offset the cost of replacing possessions damaged in a naturally occurring incident like a storm or fire. If your home was burglarized or vandalized, the proceeds could cover the cost of replacing stolen property as well. Depending on your policy, you could receive the items’ actual cash value or replacement cost, which is the cost of buying them new.
  3. Repairs Help Maintain Your Home’s Value. Homebuyers don’t pay top dollar for properties with fire-damaged siding, broken windows, or gaping holes in the roof. Your home insurance payout helps restore your home’s value with minimal out-of-pocket cost.

Cons of Filing a Home Insurance Claim

Filing a claim on your homeowners insurance policy isn’t always a slam dunk. The claims process has some hidden and not-so-hidden pitfalls that could leave you worse off than when you began.

  1. Your Insurance Premium May Go Up. Although this isn’t guaranteed, your homeowners insurance rates could rise after you file your claim. Exactly how much depends on the type of claim you file, the size of the claim, and your previous claims history. Generally, liability claims bump premiums more than claims related to fire, vandalism, or natural disasters.
  2. Too Many Claims Mean Your Policy May Not Be Renewed. A rate increase is unwelcome but manageable. A canceled policy is far more serious. If insurers see you as riskier than the typical homeowner, you could have trouble getting coverage on your own. Your lender might need to step in and take out a policy on your behalf — often at a much higher premium than your old policy.
  3. If You Get a Claim-Free Discount, You Could Lose It. Once you file a home insurance claim, your claims history is no longer spotless. That matters because many home insurance companies offer claim-free discounts for homeowners who never file claims.

When You SHOULD File a Home Insurance Claim

So, you’re thinking about filing a home insurance claim. How can you be sure you’re making the right call?

Use these tests to assess your would-be claim. The more that apply to you, the stronger your position.

Repair or Replacement Costs More Than Your Deductible

This is the first test your would-be claim must pass. If it doesn’t, there’s no point in filing a claim.

Your deductible is the amount you must pay out of pocket before your home insurance kicks in. Your policy documents should clearly specify this amount. It’s either expressed as a flat dollar amount or a percentage of the policy’s total coverage amount.

Dollar amount deductibles typically range from $500 to $2,500, with $1,000 being a common value. Some policies have more than one deductible, depending on the type of property damage. Separate “wind and hail” deductibles are common, for example — and often higher than the standard deductible.

If your home sustained significant damage or loss, your claim value should easily exceed your deductible. For example, if you expect repairs to cost $20,000 and your deductible is $2,000, your insurance company covers $18,000 — 90% of the total cost.

On the other hand, if you expect repairs to cost $3,000, your insurance company only covers $1,000 — 33% of the total cost. That’s a closer call because filing a claim could result in higher home insurance premiums that eventually offset your payout. 

The Event Is Covered by Your Policy

Your homeowners insurance company isn’t obligated to provide reimbursement for every type of damage or loss to your home. In fact, while your policy covers a lot, it probably excludes specific events, known as exclusions.

Common exclusions include but aren’t limited to:

  • Earthquake
  • Flood
  • Damage and liability issues caused by poor maintenance 
  • Insect infestations
  • Mold
  • Personal property losses and liability issues caused by power outages or power surges
  • Intentional damage caused by a resident
  • Damage caused by war or nuclear fallout
  • Injuries caused by aggressive dogs
  • Issues related to or caused by home-based businesses
  • Costs related to building code violations

You may need to purchase separate insurance policies to cover some of these perils. For example, your lender may require you to carry flood insurance if you live in a recognized flood zone. 

Other add-on policies are optional but often a good idea. For example, if you run a business out of your home, you should consider carrying business insurance to protect against inventory or equipment losses or damage to your workspace.

You’ve Suffered Significant Loss or Damage

Often, it’s not a close call. If your home is seriously damaged or destroyed in an event that’s covered by your policy, you absolutely should file a homeowners insurance claim. Otherwise, you’ll be on the hook for tens or hundreds of thousands of dollars in repair or replacement costs.

If you have any doubts about the extent of the damage to your home, get a few repair quotes from building contractors in your area. You can also talk to your insurance agent or ask your home insurance company to send out an insurance claims adjuster before you file.

You Haven’t Made a Claim in the Past 5 Years

Approved homeowners insurance claims typically remain on your insurance record for five years after they’re made. 

This record is known as the Comprehensive Loss Underwriting Exchange (CLUE) database. When you make a claim, your insurer checks its own records and the CLUE database to see whether you’ve made any other claims in the past five years.

If you have made a claim in the past five years, expect your insurance premiums to spike after your second claim is approved. 

For fire, theft, and general liability claims, the increase could amount to 50% or more of your previous premium. A weather-related claim won’t increase your premium quite as much, but you’ll still notice a jump.

When You Should NOT File a Home Insurance Claim

It’s not always worth it to file a home insurance claim. 

Certain situations, such as minor damage that costs less to repair than your insurance deductible, all but rule out a claim. Others, such as an active claim history, bring an elevated risk of a denied claim.

If any of these situations apply to you, think twice about filing a home insurance claim.

Repair or Replacement Costs Less Than Your Deductible

If the damage or loss is relatively minor, your deductible could be too high to bother filing a claim. There’s no point in filing a claim — and potentially increasing your policy premiums — if you won’t even receive a payout.

Even if it’s a close call, be mindful of the potential for your premiums to go up after a successful claim. A claim worth $20,000 probably makes sense, but a claim worth $3,000 or $4,000 might actually set you back.

Damage Was Caused by Lack of Maintenance or Normal Wear & Tear

An event that appears to be covered by your policy might not be if the insurance adjuster can argue that it was caused by neglect, poor maintenance, or even normal wear and tear.

For example, let’s say your home loses heat during the winter, causing a water pipe to burst in your ceiling. Homeowners insurance policies generally cover this type of event — if the burst pipe was in good condition to begin with. If the pipe was already heavily corroded, your insurer might blame you for not replacing it sooner. They could deny the claim altogether.

The Event Isn’t Covered by Your Policy

It’s often quite easy to figure out whether a particular event is eligible for home insurance coverage. If your home collapses in an earthquake and your policy specifically rules out claims for earthquake damage, you’re out of luck. Hopefully, you have earthquake insurance.

But closer calls are more common than you’d think. If your resident termite colony worsens an existing foundation issue that eventually spurs a costly repair, your insurer could argue that the entire claim falls under the insect damage exclusion. 

When in doubt, it’s worthwhile to begin the claims process anyway. If you don’t like what the insurance adjuster has to say, you can drop the claim without increasing your insurance rates. 

Or you can hire a public adjuster — an independent insurance adjuster who can make a stronger case to your insurance company. Public adjusters usually work on contingency, so they only get paid if your claim is successful.

You’ve Made Multiple Claims in the Past 5 Years

The more homeowners insurance claims you make in a five-year period, the more your insurance rates increase after a successful new claim. 

Make too many claims in too short a period, and your insurance company could drop you altogether. If you’re unable to find replacement coverage, your lender could take out a policy on your behalf. Expect this lender policy to cost a lot more than your old policy.

All that said, you shouldn’t automatically rule out a new homeowners insurance claim just because you recently got an insurance payout or two. If your home is seriously damaged or destroyed by a covered event, it’s probably still worth it to file. Just be ready to pay higher premiums on the back end.

Final Word

Some say the best way to save money on homeowners insurance is not to file a claim at all. There’s a grain of truth to that, but don’t take it too literally. 

If your home is seriously damaged in an event that’s covered by your policy, a home insurance claim is absolutely warranted. Taking the time to file could save you tens or hundreds of thousands of dollars in out-of-pocket expenses, keeping you on track to reach your long-term financial goals.

Still, it’s always a good idea to take stock of the situation before filing a claim. If your home sustains damage due to an event not covered by your policy or the cost of repairs doesn’t exceed your policy’s deductible, a claim isn’t in the cards. And even if filing a claim would be profitable on paper, it’s worth considering the long-term costs — in the form of higher premiums for years to come.

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GME is so 2021. Fine art is forever. And its 5-year returns are a heck of a lot better than this week’s meme stock. Invest in something real. Invest with Masterworks.

Brian Martucci writes about credit cards, banking, insurance, travel, and more. When he’s not investigating time- and money-saving strategies for Money Crashers readers, you can find him exploring his favorite trails or sampling a new cuisine. Reach him on Twitter @Brian_Martucci.


Should You File an Auto Insurance Claim After a Car Accident?

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Nothing says “rude awakening” like trudging out to your car in the morning to find the passenger window smashed and the interior ransacked. 

You don’t keep anything valuable in your vehicle, but the damage to your window is real. And the burglar put some serious dents in the door. You’re easily looking at a $1,000 repair bill.

Should you eat the cost yourself or file a car insurance claim? That depends on what your auto insurance policy covers, the size of your deductible, and how the claim might affect your car insurance rates moving forward. 

Should You File an Auto Insurance Claim?

Filing an auto insurance claim is not as easy as pushing a button. Before you begin the process, know what you’re getting yourself into.

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Pros & Cons of Filing an Auto Insurance Claim

Auto insurance claims have upsides and downsides. On the plus side, a claim helps you reduce or eliminate out-of-pocket repair costs and costly liability lawsuits. On the other hand, filing a claim can raise your premiums and might be more trouble than it’s worth.

Pros of Filing a Car Insurance Claim

Filing a car insurance claim can have clear financial benefits — if your insurance company approves the claim. 

  1. It Helps You Pay for Repairs. A successful car insurance claim reduces or eliminates your out-of-pocket car repair costs. Considering that car repair bills can cost several thousand dollars after a serious accident, that’s no small thing.
  2. It Protects You From Lawsuits. If you’re involved in a car accident that injures another person, they may be entitled to sue you for medical bills and other damages. If successful, this suit could cost you far more than repairing or even replacing your own vehicle. Your auto insurance policy can pick up some or all of these expenses, but only if you file a claim.
  3. It Could Get You Into a Newer Car. If it’s going to cost more to repair your vehicle than replace it, it’s considered a total loss. Depending on the terms of your policy, you may be entitled to a payout worth more than the car’s fair market value. You can use this reimbursement to buy a nicer, newer car than the one you lost.

Cons of Filing a Car Insurance Claim

Many car insurance claims are worth filing, but do understand the drawbacks before moving forward. Otherwise, you might be surprised by nagging out-of-pocket expenses or higher insurance premiums.

  1. It Might Raise Your Rates. It’s likely, though not guaranteed, your car insurance policy premium will increase after you file a claim. Whether and how much depends on your insurer’s surcharge schedule, which determines how rates change in response to different types of claims. If you have a blemish-free driving record, your auto insurance company might ignore your first claim and hold off on the rate increase. 
  2. You Might Still Have Out-of-Pocket Costs. In most cases, auto insurance claims reduce but don’t eliminate out-of-pocket costs. That’s because most auto insurance policies have deductibles — the portion of the claim the policyholder pays themselves before insurance coverage kicks in. The higher your deductible, the more you’ll pay out of pocket.
  3. The Claims Process Takes Time. Filing a car insurance claim is easier than it used to be. You can fill out claim forms, upload photos of the damage, and send copies of medical bills to your carrier online or through a mobile app. You might not even have to meet with an insurance adjuster in person. But the process still takes time, especially if the insurer needs more information or denies your claim at first. You have to decide whether a relatively small payout is worth the effort.

When You Should File a Car Insurance Claim

In some situations, filing a car insurance claim really is the best course of action. A claim is more likely to make sense when the stakes are higher, such as in these situations. 

1. You Had a Car Accident With Another Driver

In most cases, an accident involving another driver is grounds to file a car insurance claim. That’s true even if the accident doesn’t appear serious at first.

The other driver might notice body damage only after returning home. Or they might decide to seek medical care hours or days later when their nagging neck cramp worsens — ditto for you or your passengers.

When you’re involved in an accident with another driver, the best practice is to call the police and remain at the scene of the accident. Then, do the following:

  • Get the other drivers’ contact information, including their phone number.
  • If they have it handy, get the other drivers’ insurance information.
  • If you have one, contact your insurance agent to let them know that you’re likely to file a claim.
  • Answer the responding officer’s questions so they can produce an accident report
  • If police don’t respond in person — which is common for minor accidents in some jurisdictions — visit the nearest police station to file a police report as soon as you’re able.
  • Keep records of any medical expenses and repair bills as you receive them.

File your claim as soon as you have your repair estimates and medical bills in hand. Most states allow at least two years to file a bodily injury claim and even longer to file a personal property damage claim. But car insurance companies tend to be suspicious of claims filed months or even weeks after an event. The sooner you file, the less likely the company is to deny your claim — and the sooner you’ll get your claim payment.

2. You Were Injured in an Accident Involving Another Driver (or the Other Driver Was Injured)

Even if you think your injuries are minor, filing a car insurance claim ensures you’re protected by your policy’s bodily injury coverage. 

That’s particularly important if you don’t have health insurance or have a high-deductible health plan that could leave you on the hook for thousands of dollars in out-of-pocket medical expenses. 

Filing an insurance claim after an accident involving another driver reduces the risk you’ll be surprised by a lawsuit down the line. In some states, drivers can sue to recoup medical expenses and other costs associated with an injury and recovery, but your insurance coverage will reduce the financial burden. 

3. You Damaged Your Car Yourself & the Repairs Cost More Than Your Deductible

The “nice” thing about a single-car accident is that you don’t have to worry about other drivers’ medical claims. But single-car accidents can still be really costly, even if you walk away from them no worse for the wear.

If your estimated repair costs significantly exceed your policy’s deductible, a car insurance claim could be warranted, even if it results in a higher premium. 

But ask your insurer how much your premium is likely to increase after you file and for how long. Five years is typical, but some insurers could cut you a break sooner.

When You Should NOT File a Car Insurance Claim

While filing an insurance claim can be financially useful in cases of major damage or injury, there are times when you’re best off not filing a car insurance claim.

1. You Damaged Your Car Yourself & the Repairs Cost Less Than Your Deductible

Hold off on contacting your car insurance company after a minor accident that doesn’t involve another driver. First, determine the extent of the damage and the likely cost to repair it. 

If the repair shop quote comes in lower than your collision or comprehensive deductible, you’re better off not filing. You can choose to cover the expense out of pocket or leave it be. At best, your claim would be a financial wash, and it could cost you more in the long run if your premium increases. 

2. The Type of Damage Isn’t Covered by Your Policy

Not all types of vehicle damage are created equal, at least not in the eyes of your insurance company. 

One of the easiest ways to reduce your car insurance premiums is to drop comprehensive and collision coverage, which aren’t required by state law. If you have an older car that isn’t worth much, there’s a good chance you’ve already done so. 

That’s probably a smart move. Just know that you can’t turn around and file a claim for damage those add-ons would have covered. That includes:

  • Comprehensive Coverage. This insurance covers damage caused by animals and objects, including road crashes involving animals and objects falling on or striking the vehicle. It also covers weather-related damage, such as hail damage, as well as theft, vandalism, and sometimes fire damage.
  • Collision Coverage. Collision insurance covers crashes involving another vehicle or a stationary object, such as a tree, building, or retaining wall. It also covers single-vehicle rollovers and fall-overs.

Note that if you’re still paying off your car loan, you may be required by the lender to carry these types of insurance.

3. Your Car Isn’t Damaged & the Other Driver Doesn’t Want to Pursue a Claim

If you’re fortunate enough to escape a minor fender bender with no visible damage to your car and no bodily injury to yourself or your passengers, you don’t need to file a claim for your own purposes.

If the other driver or drivers involved in the accident were similarly fortunate, they might not want to file a claim either. Even if they sustained minor vehicle damage, they might not want to take things further because they don’t have valid car insurance. About 1 in 8 U.S. drivers were uninsured in 2019, according to the Insurance Information Institute.

In this case, you can simply walk — or drive — away.

Final Word

Millions of car accidents happen on American roads each year. Each one represents a potential unexpected expense for the person or persons involved.

Not all cause significant financial distress, however. Very often, car insurance makes the difference. Adequate car insurance coverage can turn a $5,000 repair bill into a far more manageable $500 expense, entirely offset the cost of replacing your totaled vehicle, or even shield you from a lawsuit that might otherwise bankrupt you.

On the other hand, minor fender benders might not warrant the effort it takes to file an auto insurance claim. Filing could even backfire if it produces little upfront financial benefit and years of higher premiums on the back end. 

So it pays to know when to file — and when to hold your fire.

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GME is so 2021. Fine art is forever. And its 5-year returns are a heck of a lot better than this week’s meme stock. Invest in something real. Invest with Masterworks.

Brian Martucci writes about credit cards, banking, insurance, travel, and more. When he’s not investigating time- and money-saving strategies for Money Crashers readers, you can find him exploring his favorite trails or sampling a new cuisine. Reach him on Twitter @Brian_Martucci.


Tax Changes and Key Amounts for the 2022 Tax Year

Now that this year’s tax filing season is over, it’s time to start thinking about next year’s return. After all, the more tax planning you do, the more money you may be able to save. But proper tax planning requires an awareness of what’s new and changed from last year — and there are plenty of tax law changes and updates for the 2022 tax year that savvy taxpayers need to know about.

Big tax breaks were enacted for the 2021 tax year by the American Rescue Plan Act, which was signed into law in March 2021. But most of those tax law changes expired at the end of 2021. As a result, the child tax credit, child and dependent care credit, earned income credit and other popular tax breaks are different for the 2022 tax year than they were for 2021. Other 2022 tweaks are the result of new rules or annual inflation adjustments. But no matter how, when or why the changes were made, they can hurt or help your bottom line — so you need to be ready for them. To help you out, we pulled together a list of the most important tax law changes and adjustments for 2022 (some related items are grouped together). Use this information now so you can hold on to more of your hard-earned cash next year when it’s time to file your 2022 return.

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Child Tax Credit

picture of "child tax credit" spelled out in lettered blockspicture of "child tax credit" spelled out in lettered blocks

Major changes were made to the child tax credit for 2021 – but they were only temporary. The credit amount was increased, the credit was made fully refundable, children up to 17 years of age qualified, and half the credit amount was paid in advance through monthly payments from July to December last year. President Biden and Congressional Democrats tried to extend these enhancements for at least one more year, but they haven’t been able to get that done so far (and probably won’t be able to later).

As a result, the child tax credit reverts back to its pre-2021 form for the 2022 tax year. That means the 2022 credit amount drops back down to $2,000 per child (it was $3,000 for children 6 to 17 years of age and $3,600 for children 5 years old and younger for the 2021 tax year). Children who are 17 years old don’t qualify for the credit this year, because the former age limit (16 years old) returns. For some lower-income taxpayers, the 2022 credit is only partially refundable (up to $1,500 per qualifying child), and they must have earned income of at least $2,500 to take advantage of the credit’s limited refundability. And there will be no monthly advance payments of the credit in 2022.

2 of 25

Child and Dependent Care Tax Credit

picture of form for the child and dependent care tax creditpicture of form for the child and dependent care tax credit

Significant improvements were also made to the child and dependent care credit for 2021. But, again, the changes only applied for one year.

By way of comparison, the 2021 credit was worth 20% to 50% of up to $8,000 in eligible expenses for one qualifying child/dependent or $16,000 for two or more. The percentage decreased as income exceeded $125,000. When you combine the top percentage and the expense limits, the maximum credit for 2021 was $4,000 if you had one qualifying child/dependent (50% of $8,000) or $8,000 if you had more than one (50% of $16,000). The credit was also fully refundable in 2021.

For 2022, the child and dependent care credit is non-refundable. The maximum credit percentage also drops from 50% to 35%. Fewer care expenses are eligible for the credit, too. For 2022, the credit is only allowed for up to $3,000 in expenses for one child/dependent and $6,000 for more than one. When the 35% maximum credit percentage is applied, that puts the top credit for the 2022 tax year at $1,050 (35% of $3,000) if you have just one child/dependent in your family and $2,100 (35% of $6,000) if you have more. In addition, the full child and dependent care credit will only be allowed for families making less than $15,000 a year in 2022 (instead of $125,000 per year). After that, the credit starts to phase-out.

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Earned Income Tax Credit

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More workers without qualifying children were able to claim the earned income tax credit (EITC) on their 2021 tax return, including both younger and older Americans. The “childless EITC” amounts were higher, too. However, once again, those enhancements expired at the end of last year.

Without the 2021 improvements in place, the minimum age for a childless worker to claim the EITC jumps back up to 25 for 2022 tax returns (it was 19 in 2021). The maximum age limit (65 years of old), which was eliminated for the 2021 tax year, is also back in play for 2022. The maximum credit available for childless workers also plummets from $1,502 to $560 for the 2022 tax year. Expanded eligibility rules for former foster youth and homeless youth that applied for 2021 are dropped as well. In addition, the rule allowing you to use your 2019 earned income to calculate your EITC if it boosted your credit amount no longer applies.

There are also several inflation-based adjustments that modify the EITC for the 2022 tax year. For example, the maximum credit amount is increased from $3,618 to $3,733 for workers with one child, from $5,980 to $6,164 for workers with two children, and from $6,728 to $6,935 for workers with three or more children. The earned income required to claim the maximum EITC is also adjusted annually for inflation. For 2022, it’s $10,980 if you have one child ($10,640 for 2021), $15,410 if you have two or more children ($14,950 for 2021), and $7,320 if you have no children ($7,100 for 2021).

The EITC phase-out ranges are adjusted each year to account for inflation, too. For 2022, the credit starts to phase out for joint filers with children if the greater of their adjusted gross income (AGI) or earned income exceeds $26,260 ($25,470 for 2021). It’s completely phased out for those taxpayers if their AGI or earned income is at least $49,622 if they have one child ($48,108 for 2021), $55,529 if they have two children ($53,865 for 2021), or $59,187 if they have three or more children ($57,414 for 2021). For other taxpayers with children, the 2022 phase-out ranges are $20,130 to $43,492 for people with one child ($19,520 to $42,158 for 2021), $20,130 to $49,399 for people with two children ($19,520 to $47,915 for 2021), and $20,130 to $53,057 for people with more than two children ($19,520 to $51,464 for 2021). If you don’t have children, the 2022 phase-out range is $15,290 to $22,610 for joint filers ($14,820 to $21,920 for 2021) and $9,160 to $16,480 for other people ($8,880 to $15,980 for 2021).

Finally, the limit on a worker’s investment income is increased to $10,300 ($10,000 for 2021).

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Recovery Rebate Credit

picture of a tax form, government check, and one-hundred dollar billpicture of a tax form, government check, and one-hundred dollar bill

Americans were thrilled last March to hear they were getting a third stimulus check in 2021. Those checks were for up to $1,400, plus an additional $1,400 for each dependent in your family. (Use our Third Stimulus Check Calculator to see you how much money you should have gotten.) But some people who were eligible for a third-round stimulus check didn’t receive a payment or got less than what they should have received. For those people, relief was available in the form of a 2021 tax credit known as the recovery rebate credit.

However, there are no stimulus check payments in 2022. As a result, there is no recovery rebate credit for the 2022 tax year.

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Tax Brackets

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Although the tax rates didn’t change, the income tax brackets for 2022 are slightly wider than for 2021. The difference is due to inflation during the 12-month period from September 2020 to August 2021, which is used to figure the adjustments.

2022 Tax Brackets for Single/Married Filing Jointly/Head of Household

Tax Rate

Taxable Income (Single)

Taxable Income (Married Filing Jointly)

Taxable Income (Head of Household)


Up to $10,275

Up to $20,550

Up to $14,650


$10,276 to $41,775

$20,551 to $83,550

$14,651 to $55,900


$41,776 to $89,075

$83,551 to $178,150

$55,901 to $89,050


$89,076 to $170,050

$178,151 to $340,100

$89,051 to $170,050


$170,051 to $215,950

$340,101 to $431,900

$170,051 to $215,950


$215,951 to $539,900

$431,901 to $647,850

$215,951 to $539,900


Over $539,900

Over $647,850

Over $539,900

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Long-Term Capital Gains Tax Rates

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Tax rates on long-term capital gains (i.e., gains from the sale of capital assets held for at least one year) and qualified dividends did not change for 2022. However, the income thresholds to qualify for the various rates were adjusted for inflation.

In 2022, the 0% rate applies for individual taxpayers with taxable income up to $41,675 on single returns ($40,400 for 2021), $55,800 for head-of-household filers ($54,100 for 2021) and $83,350 for joint returns ($80,800 for 2021).

The 20% rate for 2022 starts at $459,751 for singles ($445,851 for 2021), $488,501 for heads of household ($473,751 for 2021) and $517,201 for couples filing jointly ($501,601 for 2021).

The 15% rate is for filers with taxable incomes between the 0% and 20% break points.

The 3.8% surtax on net investment income stays the same for 2022. It kicks in for single people with modified AGI over $200,000 and for joint filers with modified AGI over $250,000.

For more on long-term capital gains tax rates, see What Are the Capital Gains Tax Rates for 2021 vs. 2022?

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Standard Deduction

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The standard deduction amounts were increased for 2022 to account for inflation. Married couples get $25,900 ($25,100 for 2021), plus $1,400 for each spouse age 65 or older ($1,350 for 2021). Singles can claim a $12,950 standard deduction ($12,550 for 2021) — $14,700 if they’re at least 65 years old ($14,250 for 2021). Head-of-household filers get $19,400 for their standard deduction ($18,800 for 2021), plus an additional $1,750 once they reach age 65 ($1,700 for 2021). Blind people can tack on an extra $1,400 to their standard deduction ($1,350 for 2021). That jumps to $1,750 if they’re unmarried and not a surviving spouse ($1,700 for 2021).

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1099-K Forms

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Starting with the 2022 tax year, third-party payment settlement networks (e.g., PayPal and Venmo) will send you a Form 1099-K if you are paid over $600 during the year for goods or services, regardless of the number of transactions. Previously, the form was only sent if you received over $20,000 in gross payments and participated in more than 200 transactions. The gross amount of a payment doesn’t include any adjustments for credits, cash equivalents, discount amounts, fees, refunded amounts, or any other amounts.

This change to the reporting threshold means more people than ever will get a 1099-K form next year that they will use when filling out their income tax returns for the 2022 tax year. However, remember that 1099-K reporting is only for money received for goods and services. It doesn’t apply to payments from family and friends.

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Charitable Gift Deductions

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The “above-the-line” deduction for up to $300 of charitable cash contributions ($600 for married couple filing a joint return) expired at the end of 2021. As a result, it isn’t available for the 2022 tax year (it was available for 2020 and 2021). Only people who claimed the standard deduction on their tax return (rather than claiming itemized deductions on Schedule A) were allowed to take this deduction.

The 2020 and 2021 suspension of the 60%-of-AGI limit on deductions for cash donations by people who itemize also expired, so the limit is back in place starting with the 2022 tax year.

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Retirement Savings

picture of a compass pointing to the word "retirement"picture of a compass pointing to the word "retirement"

Here’s some good news for retirees: The IRS updated the table used to calculate required minimum distributions (RMDs) to account for longer life expectancies beginning in 2022. That means RMDs should be a bit smaller starting in 2022 than they were before.

For people who are still saving for retirement, many key dollar limits on retirement plans and IRAs are higher in 2022. For example, the maximum contribution limits for 401(k), 403(b) and 457 jumps from $19,500 to $20,500 for 2022, while people born before 1973 can once again put in $6,500 more as a “catch-up” contribution. The 2022 cap on contributions to SIMPLE IRAs is $14,000 ($13,500 in 2021), plus an extra $3,000 for people age 50 and up.

The 2022 contribution limit for traditional IRAs and Roth IRAs stays steady at $6,000, plus $1,000 as an additional catch-up contribution for individuals age 50 and up. However, the income ceilings on Roth IRA contributions went up. Contributions phase out in 2022 at adjusted gross incomes (AGIs) of $204,000 to $214,000 for couples and $129,000 to $144,000 for singles (up from $198,000 to $208,000 and $125,000 to $140,000, respectively, for 2021).

Deduction phaseouts for traditional IRAs also start at higher levels in 2022, from AGIs of $109,000 to $129,000 for couples and $68,000 to $78,000 for single filers (up from $105,000 to $125,000 and $66,000 to $76,000 for 2021). If only one spouse is covered by a plan, the phaseout zone for deducting a contribution for the uncovered spouse starts at $204,000 of AGI and ends at $214,000 (they were $198,000 and $208,000 for 2021).

More lower-income people may be able to claim the “saver’s credit” in 2022, too. This tax break can be worth up to $1,000 ($2,000 for joint filers), but you must contribute to a retirement account and your adjusted gross income (AGI) must be below a certain threshold to qualify. For 2022, the income thresholds are $34,000 of adjusted gross income (AGI) for single filers and married people filing a separate return ($33,000 for 2021), $68,000 for married couples filing jointly ($66,000 for 2021), and $51,000 for head-of-household filers ($49,500 for 2021).

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Teacher Expenses

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For the 2022 tax year, teachers and other educators who dig into their own pockets to buy books, supplies, COVID-19 protective items, and other materials used in the classroom can deduct up to $300 of these out-of-pocket expenses ($250 for 2021). The maximum deduction for 2022 jumps to $600 for a married couple filing a joint return if both spouses are eligible educators – but not more than $300 each.

An “eligible educator” is anyone who is a kindergarten through 12th grade teacher, instructor, counselor, principal, or aide in a school for at least 900 hours during a school year. Homeschooling parents can’t take the deduction.

This is an “above-the-line” deduction. So, you don’t have to itemized to claim it.

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Kiddie Tax

picture of a child dressed in a suit with bags of moneypicture of a child dressed in a suit with bags of money

The kiddie tax has less bite in 2022. The first $1,150 of a child’s unearned income is tax-free if the child is 18 years old or younger, or a full-time student under 24. The next $1,150 is taxed at the child’s rate. Any excess over $2,300 is taxed at the parent’s rate. (For 2021, only the first $1,100 was exempt and the next $1,100 was taxed at the child’s rate.)

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Adoption of a Child

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For 2022, the adoption credit can be taken on up to $14,890 of qualified expenses ($14,440 for 2021). The full credit is available for a special-needs adoption, even if it costs less. The credit begins to phase out for filers with modified AGIs over $223,410 and disappears at $263,410 ($214,520 and $254,520, respectively, for 2021).

The exclusion for company-paid adoption aid was also increased from $14,440 to $14,890 for 2022.

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Bonds Used for Education

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The income caps are higher in 2022 for tax-free EE and I bonds used for education. The exclusion starts phasing out above $128,650 of modified AGI for couples and $85,800 for others ($124,800 and $83,200 for 2021). It ends at modified AGI of $158,650 and $100,800, respectively ($154,800 and $98,200 for 2021). The savings bonds must be redeemed to help pay for tuition and fees for college, graduate school or vocational school for the taxpayer, spouse or a dependent.

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Parking and Transportation Benefits

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Employers can provide a little more to their workers in 2022 when it comes to parking and transportation-related fringe benefits. The 2022 cap on employer-provided tax-free parking goes up from $270 to $280 per month. The 2022 exclusion for mass transit passes and commuter vans is also $280 ($270 in 2021).

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Americans Working Abroad

picture of woman holding a U.S. passport and an airplane boarding passpicture of woman holding a U.S. passport and an airplane boarding pass

U.S. taxpayers working abroad have a larger foreign earned income exclusion in 2022. It jumped from $108,700 for 2021 to $112,000 for 2022. (Taxpayers claim the exclusion on Form 2555.)

The standard ceiling on the foreign housing exclusion is also increased from $15,218 to $15,680 for 2022 (although overseas workers in many high-cost locations around the world qualify for a significantly higher exclusion).

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Payroll Taxes

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The Social Security annual wage base is $147,000 for 2022 (that’s a $4,200 hike from 2021). The Social Security tax rate on employers and employees stays at 6.2%. Both workers and employers continue to pay the 1.45% Medicare tax on all compensation in 2022, with no cap. Workers also pay the 0.9% Medicare surtax on 2022 wages and self-employment income over $200,000 for singles and $250,000 for couples. The surtax doesn’t hit employers, though.

The nanny tax threshold went up to $2,400 for 2022, which was a $100 increase from 2021.

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Standard Mileage Rates

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The 2022 standard mileage rate for business driving rose from 56¢ to 58.5¢ a mile. The mileage allowance for medical travel and military moves also increased from 16¢ to 18¢ a mile in 2022. However, the charitable driving rate stayed put at 14¢ a mile — it’s fixed by law.

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Long-Term Care Insurance Premiums

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The limits on deducting long-term care insurance premiums are higher in 2022 for one age group. Taxpayers who are age 61 to 70 can deduct up to $4,510 for 2022, which is a $10 decrease from the 2021 amount.

The 2022 deduction limits for all age groups are the same as the 2021 amounts. Here’s the complete list of limits by age:

  • 40 years old or less = $450
  • 41 to 50 years old = $850
  • 51 to 60 years old = $1,690
  • 61 to 70 years old = $4,510
  • 71 years of age or older = $5,640

For most people, long-term care premiums are medical expenses deductible only by itemizers on Schedule A. However, self-employed people can deduct them on Schedule 1 of the 1040.

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Health Savings Accounts (HSAs)

picture of piggy bank next to HSA savings jarpicture of piggy bank next to HSA savings jar

The annual cap on deductible contributions to health savings accounts (HSAs) rose in 2022 from $3,600 to $3,650 for self-only coverage and from $7,200 to $7,300 for family coverage. People born before 1968 can put in $1,000 more (same as for 2021).

Qualifying insurance policies must limit out-of-pocket costs in 2022 to $14,100 for family health plans ($14,000 in 2021) and $7,050 for people with individual coverage ($7,000 in 2021). Minimum policy deductibles remain at $2,800 for families and $1,400 for individuals.

For 2023 HSA-related amounts, see HSA Contribution Limits for 2023 Are Out.

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Flexible Spending Accounts (FSAs)

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For 2022, the limit on employee contributions to a healthcare flexible spending account (FSA) is $2,850, which is $100 more than the 2021 limit. If the employer’s plan allows the carryover of unused amounts, the maximum carryover amount for 2022 is $570 ($550 for 2021).

On the other hand, workers can’t contribute as much to a dependent care FSA in 2022 as they could in 2021. Last year, as a COVID-relief measure, a family could sock away up to $10,500 in a dependent care FSA without paying tax on the contributions. But for 2022, the normal limit of $5,000-per-year on tax-free contributions applies once again.

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Alternative Minimum Tax (AMT)

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There’s good news for anyone worried about getting hit with the alternative minimum tax: AMT exemptions ticked upward for 2022. They increased from $114,600 to $118,100 for couples and from $73,600 to $75,900 for single filers and heads of household. The phaseout zones for the exemptions start at higher income levels for the 2022 tax year as well — $1,079,800 for couples and $539,900 for singles and household heads ($1,047,200 and $523,600, respectively, for 2021).

In addition, the 28% AMT tax rate kicks in a bit higher in 2022 — above $206,100 of alternative minimum taxable income. The rate applied to AMTI over $199,900 for 2021.

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Tax “Extenders”

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There’s a group of tax breaks that are constantly scheduled to expire, but that keep getting extended by Congress for another year or two. These tax breaks are collectively referred to as “tax extenders.”

But so far, Congress hasn’t passed legislation to renew the “tax extender” deductions and credits that expired at the end of 2021. Most of the expired tax breaks were for businesses, but the following expired tax breaks impacted individual taxpayers:

  • Mortgage insurance premiums deduction;
  • Health coverage tax credit for medical insurance premiums paid by certain Trade Adjustment Assistance recipients and people whose pension plans were taken over by the Pension Benefit Guaranty Corporation;
  • Nonbusiness energy property credit for certain energy-saving improvements to your home (e.g., new energy-efficient windows and skylights, exterior doors, roofs, insulation, heating and air conditioning systems, water heaters, etc.);
  • Fuel cell motor vehicle credit;
  • Alternative fuel vehicle refueling property credit; and
  • Two-wheeled plug-in electric vehicle credit.

At some point, lawmakers may swoop in and extend some or all of these tax breaks once again as they have in the past. They sometimes even make the extensions retroactive, so the tax breaks list above could still be available for the 2022 tax year. We’ll just have to wait and see what Congress decides to do with these “tax extender” deductions and credits – stay tuned for future developments.

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Self-Employed People

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If you’re self-employed, there are a couple of 2022 tax law changes that could impact your bottom line. First, a key dollar threshold on the 20% deduction for pass-through income was increased for 2022. Self-employed people (along with owners of LLCs, S corporations and other pass-through entities) can deduct 20% of their qualified business income, subject to limitations for individuals with taxable incomes in excess of $340,100 for joint filers and $170,050 for others ($329,800 and $164,900, respectively, for 2021).

Second, tax credits that were allowed for self-employed people who couldn’t work for a reason that would have entitled them to pandemic-related sick or family leave if they were an employee have expired and aren’t available for the 2022 tax year.

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Estate & Gift Taxes

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The lifetime estate and gift tax exemption for 2022 jumped from $11.7 million to $12.06 million — $24.12 million for couples if portability is elected by timely filing IRS Form 706 after the death of the first-to-die spouse.

The special estate tax valuation of real estate also increases for 2022. For the estate of a person dying this year, up to $1.23 million of farm or business real estate can receive discount valuation (up to $1.19 million in 2021), letting the estate value the realty at its current use instead of fair market value.

More estate tax liability qualifies for an installment payment tax break, too. If one or more closely held businesses make up greater than 35% of a 2022 estate, as much as $656,000 of tax can be deferred and the IRS will charge only 2% interest (up to $636,000 for 2021).

Finally, the annual gift tax exclusion for 2022 rises from $15,000 to $16,000 per donee. So, you can give up to $16,000 ($32,000 if your spouse agrees) to each child, grandchild or any other person in 2022 without having to file a gift tax return or tap your lifetime estate and gift tax exemption.


5 Different Types of Taxes and How to Minimize Them

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Additional Resources

Income taxes may be on your mind during this time of year, but they’re not the only taxes you’re required to pay. Americans are on the hook for several different types of taxes throughout the year.

While most of us would prefer to minimize the taxes we pay — or not pay any taxes at all — the truth is that paying taxes confers several important benefits. Still, nobody wants to pay more than their fair share. Fortunately, there are opportunities to reduce your tax burden and spread out the impact taxes have on your overall financial picture.

Here are five types of taxes you may be subject to at some point, along with tips on how to minimize their impact.

1. Income Taxes

Man Filling Out Tax Forms

Most Americans who receive income in a given year must file a tax return. Only if you earned less than the IRS-designated gross income limits can you forego filing a federal income tax return. For the 2021 tax year (returns filed during 2022), the gross income limits are as follows:

  • Single: $12,550 ($14,250 if age 65 or older)
  • Head of Household: $18,800 ($20,500 if age 65 or older)
  • Qualifying Widow(er): $21,500 ($26,450 if age 65 or older)
  • Married Filing Separately: $5
  • Married Filing Jointly: $25,100 ($26,450 if one spouse is age 65 or older; $27,800 if both spouses are age 65 or older)

Many taxpayers who file a return are lucky enough to receive a refund on their taxes because they overpaid as a result of paycheck withholding. Of course, it’s also possible to owe more money at the end of the year, in which case you may need to adjust your withholding so you don’t find yourself in the same position next year.

Although writing a check to the IRS is never fun, keep in mind your taxes serve a purpose. The funds you pay are an important source of revenue for federal, state, and local governments because they’re paid regularly throughout the year, thus helping to balance budgets and keep smaller governments from having budget crises.

So the next time you’re feeling down about how much you’re paying Uncle Sam, consider the roads you travel to work each day, the military members who protect our country, and your grandparents who depend on their Social Security check each month. That’s your tax dollars at work.

What You Can Do to Ease the Burden

If you’re looking for ways to reduce your federal income tax bill, you have several options.

Tax Credits & Deductions

One of the most effective ways to lower your tax bill is by taking advantage of tax deductions and tax credits.

Although not everyone qualifies for credits, and the tax breaks you’re eligible to claim may change from year to year, they’re worth looking into or asking your tax preparer about.

Some of the more popular tax credits include:

Some of the more popular tax deductions include:


Another way to offset your income tax burden is to make tax-advantaged investments. The Tax Code incentivizes investing in several ways:

  • Capital Gains. If you’ve invested before, you’re probably familiar with capital gains, or the profit you make when selling appreciated stocks, bonds, and property. If you hold an investment for one year or more, any gain you make on the sale is taxed at long-term capital gains tax rates. For 2022, those rates are zero, 15%, or 20%, depending on your taxable income. That’s significantly less than the highest marginal tax bracket on ordinary income, which is 37% in 2022. If you sell an asset you’ve owned for a year or less, any gain is considered short-term and is taxed at your ordinary income tax rate.
  • Capital Losses. Not every stock pick is a winner. And while nobody wants to lose money on their investments, at least you can use those losses to lower your tax bill. When you file your tax return, you can use long-term losses to offset long-term gains and short-term losses to offset short-term gains. If you have more gains than losses, you can deduct up to $3,000 of capital losses from ordinary income, such as wages or profit from a business. Any remaining losses can be carried forward to the following year.
  • Dividends. If you invest in stocks and mutual funds, you’ve probably received a Form 1099-DIV at year-end that breaks down your dividend income into qualified and ordinary income. Did you know you might pay a lower tax rate on those qualified dividends? Qualified dividends come from shares of domestic corporations and certain qualified foreign corporations that you’ve held for at least a specified minimum period. These dividends are taxed at long-term capital gains tax rates, while ordinary dividends are taxed at ordinary income tax rates.
  • Tax-Exempt Interest. Some investments pay interest that’s exempt from federal income taxes. The most common way to earn tax-exempt interest is to invest in municipal bonds. Keep in mind, though, that interest from municipal bonds may be subject to the alternative minimum tax (AMT) and may be taxable at the state level.

State Income Taxes

Speaking of state income taxes, you can avoid them entirely if you live in Alaska, Florida, Nevada, South Dakota, Texas, Washington, or Wyoming. While you can’t escape federal income taxes no matter where you live, these seven states levy no state income tax on their residents. However, they might make up for it with higher sales taxes, property taxes, and excise taxes.

Two other states, New Hampshire and Tennessee, have no taxes on income from wages. However, these states do tax interest and dividend income.

2. Excise Taxes

Excise Tax Letters Blocks

Speaking of excise taxes, you pay these when you purchase specific goods, and they’re often included in their cost. So if the product you buy is also subject to sales tax, you might be paying tax on a tax. A common example is the federal gasoline excise tax of 18.4% (24.4% on diesel fuel). States also impose taxes on gasoline, the highest being California at 66.98 cents per gallon. The lowest is Alaska at 14.98 cents per gallon.

Excise taxes are also charged on products such as tobacco and alcohol and activities such as wagering, road use by trucks, and tanning salons. Some states charge an excise tax on the sale of a home, which is usually paid by the seller. Excise taxes are not sales tax, so you can’t claim them as an itemized deduction on your federal tax return.

What You Can Do to Ease the Burden

Excise taxes are difficult to avoid, and they’re not usually apparent because they’re included in the price of the product. If you’re not interested in tobacco, alcohol, wagering, or tanning salons, you can avoid federal excise taxes on these products and activities. Driving a hybrid or electric car, relying on public transportation, or switching to a bicycle will help you avoid excise taxes on gasoline, at least in part.

Some states also impose an excise tax on public utilities, which the utility companies pass along to consumers. Unless you want to move to a cabin in the woods with no power, phone, or running water, you’ll have a tough time avoiding these taxes entirely.

3. Sales Tax

Small Grocery Cart And Money

Otherwise known as consumption tax, sales tax tends to affect the wealthy more because the more you consume, the more you are taxed. Because sales tax is assessed as a percentage of a product or service’s sales price, it’s a simple equation: The more you buy, the more you pay.

The federal government doesn’t get involved in setting sales tax rates. Instead, each state and local government sets its own. If you’ve traveled the country at all, you may have noticed that sales tax varies from place to place. Every state except Delaware, Montana, New Hampshire, and Oregon assesses sales tax.

While the income tax is considered a progressive tax (the higher your income, the higher your tax rate), sales tax is considered a regressive tax (the tax rate is higher for those with lower income). To illustrate, consider the following example:

Consumer #1:

  • Income: $500 per week
  • Groceries: $150 per week
  • Sales Tax on Grocery Purchases: $9.00
  • Sales Tax as a Percentage of Income: 1.8%

Consumer #2:

  • Income: $1,500 per week
  • Groceries: $150 per week
  • Sales Tax on Grocery Purchases: $9.00
  • Sales Tax as a Percentage of Income: 0.6%

For Consumer #1, who has an income that’s one-third that of Consumer #2, the amount of sales tax they pay, expressed as a percentage of their income, is three times higher than Consumer #2’s for the same purchase amount. That’s what is meant by a regressive tax: It falls more heavily on lower-income earners.

In most states that have a sales tax, prescription drugs are excluded to reduce the overall tax burden on essential items, as well as to reduce the regressive effect. The only exception is Illinois, which taxes prescription drugs at the state level but at a reduced rate of 1%. Even there, all prescription and over-the-counter medications are tax-exempt at the local level.

Most states also exclude groceries, but the sales tax treatment of groceries varies from state to state. Some fully exempt groceries; some exempt most groceries but tax candy and soda. Some have tax credits or rebates to offset the tax on groceries, and some tax groceries at a lower rate than other goods.

What You Can Do to Ease the Burden

Unfortunately, there aren’t too many ways to escape sales tax apart from making fewer purchases, shopping at garage sales, or using the barter system.

However, you might be able to get a tax deduction for the sales tax you pay. The Protecting Americans from Tax Hikes Act of 2015 (the PATH Act) made permanent the provision to claim general sales taxes instead of states’ income taxes as an itemized deduction. 

This may be especially helpful to taxpayers who buy a new car, boat, or home addition and end up paying more in sales taxes than in state income taxes in a given year. It’s also a benefit for people who live in those states with sales tax that don’t have a state income tax.

4. Property Taxes

Piggy Bank And Miniature House

Property taxes, also called real estate taxes, are one of the oldest forms of taxation. In the United States, the funds typically go toward local concerns, such as sewage treatment, road maintenance, drinking water, and schools.

Property taxes are calculated based on the value of your property, which includes the value of the land itself plus the value of any buildings you have on it. Property taxes go up by predetermined amounts set by your county assessor or equivalent office.

Property taxes vary widely from state to state and are most often expressed as a percentage of property value. New Jersey, for example, has the highest median property tax rate at 2.47%, while in Hawaii, the median rate is just 0.27%.

What You Can Do to Ease the Burden

You could rent instead of buying a home, but you’ll still pay property taxes indirectly through your rent. If you’re considering buying a home but are flexible about where you live, it makes sense to do your homework and find out where the lowest property tax rates are. 

No matter where you own a home, you may be able to save money on property taxes by appealing your home’s assessment. You may need to get your home appraised by a professional appraiser to prove that it’s not worth the value the county is using to calculate your tax bill. The process for appealing your taxes varies from state to state, so check with your local tax assessor or board of equalization.

Also, don’t forget you can claim your property taxes as an itemized deduction on your federal income tax return. However, keep in mind the Tax Cuts and Jobs Act of 2017 (TCJA) limited the deduction for state and local taxes to $10,000 ($5,000 if married filing separately). That includes deductible state income taxes, property taxes, and sales taxes.

5. Estate Taxes

Estate Tax Gavel Scale Planning House

Federal estate taxes are one area in which most people can rest easy.

For 2022, the estate tax exclusion amount is $12.06 million per person. That means a person who dies in 2022 can leave up to $12.06 million to their heirs tax-free. A married couple gets twice that amount. Any money inherited beyond this amount is taxed at a top tax rate of 40%.

Of course, through gifting, trusts, and other estate planning strategies, many wealthy individuals structure their estate in such a way that they’re subject to very little estate tax.

What You Can Do to Ease the Burden

If you’re lucky enough to be worried about passing more than $12.06 million on to friends and family, it’s time to involve a professional. You can avoid or at least minimize the impact of estate taxes through estate planning, such as establishing a trust or taking advantage of the gift tax exclusion.

Final Word

Remember, the tax filing deadline in April isn’t the only day you’re taxed as an American citizen. By learning more about the types of taxes you pay, you can reduce the amount you pay all year long. Get educated and maximize your savings.

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Since 2017, Masterworks has successfully sold three paintings, each realizing a net anualized gain of +30% per work. (This is not an indication of Masterworks’ overall performance and past performance is not indicative of future results.)

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Amy Livingston is a freelance writer who can actually answer yes to the question, “And from that you make a living?” She has written about personal finance and shopping strategies for a variety of publications, including,, and the Dollar Stretcher newsletter. She also maintains a personal blog, Ecofrugal Living, on ways to save money and live green at the same time.