Many tax items are subject to annual adjustments for inflation. These include tax brackets, retirement contributions, standard deductions, and many others. What effect do certain inflation adjustments have on tax liability from year-to-year?

A married couple has combined W-2 income of $68,220. Use the appropriate Tax Tables.

Required:

For tax year 2022, determine their tax liability.

In tax year 2021, the tax tables and amount of standard deduction were different from tax year 2022. Locate the 2021 tax tables and determine the 2021 standard deduction amount. The web is a good place to start your search. If the couple had $68,220 of W-2 income in tax year 2021, what would have been their tax liability?

What is the difference between 2021 tax liability and 2022 tax liability?

Note: For all requirements, round your intermediate calculations and final answer to the nearest dollar amount.

How much of that difference is the result of changes to the tax tables? How much of that difference is the result of the change to the standard deduction?