GRAND RAPIDS, Mich. (WOOD) — The IRS recently announced changes to next year’s tax brackets due to inflation. While that could bump certain taxpayers into a lower bracket, certified public accountant Duane Culver, with the Culver CPA group, says most people won’t notice a significant difference.
“The brackets change slightly every year… it’s a little more pronounced this year because of inflation. What happens is the income brackets increase before the tax bracket jumps, so it’s giving you a little more income in a lower bracket,” Culver explained.
He said the impact will be minimal because only the income above the threshold is taxed at the higher rate.
Taxpayers don’t have to make any changes to their Form W-4s in light of the new brackets. Employers will adjust the rates accordingly.
However, Culver suggested you look at your investments and spending with inflation rising like it is now.
“I would be looking at making my investments in things that increase in value,” Culver said. “So I’d be funding my retirement, talking to my financial advisor and not consuming all of my income. As we consume our income on things that decrease in value, those aren’t helpful in an inflation environment.”