There are seven federal tax brackets for the 2023 tax year, ranging from 10% to 37%. As a general rule, the more you earn, the higher your tax rate. And the higher your income and tax rate, the more money you will probably owe the IRS (Internal Revenue Service) in taxes.
How much you’ll pay in federal tax on your 2023 income (due in 2024) will depend on which bracket your income falls in, as well as your tax-filing status and other factors, such as deductions.
When people look at tax charts, however, they often assume that having an income in a particular tax bracket (such as 22%) means that all of your income is taxed at that rate. Actually, tax brackets are “marginal.” This term means that only the part of your income within each range is taxed at the corresponding tax rate.
Read on to learn more about this at times complicated topic, including answers to these questions:
• Which tax bracket am I in?
• How can I use the 2023 tax chart to figure out how much I will owe?
• What are some tips to lower my tax bracket?
What Are Tax Brackets?
A tax bracket determines the range of incomes upon which a certain income tax rate is applied. America’s federal government uses a progressive tax system: Filers with lower incomes pay lower tax rates, and those with higher incomes pay higher tax rates.
There are currently seven tax brackets in the US which range from 10% to 37%, as briefly noted above. However, not all of your income will necessarily be taxed at a single rate. Even if you know the answer to “What is my federal tax bracket?” you are likely to pay multiple rates. Read on to learn more about how exactly this works.
Also note that the income levels have been adjusted in 2023 vs. 2022 to take into account the impact of inflation and other factors. So even if you made the same amount in 2023 as in 2022, you are not necessarily in the same bracket again. It’s important to note these changes.
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How Do Tax Brackets Work?
Whether you’re filing taxes for the first time or have been doing so for decades, you may wonder how you know what tax bracket you’re in.
While there are seven basic tax brackets, your income doesn’t necessarily get grouped into one level in which you pay that rate on all of your income. This only happens if your total income is in the lowest possible tax bracket.
Otherwise, the tax system is also graduated in such a way so that taxpayers don’t pay the same rate on every dollar earned. Instead, you pay higher rates on each dollar that exceeds a certain threshold.
• For example, if your taxable income is $50,000 for 2023, not all of it is taxed at the 22% rate that includes incomes from $44,726 to $95,375 for single filers. Some of your income will be taxed at the lower tax brackets, 10% and 12%. Below, you’ll find a specific example of how this works.
In addition to knowing which tax bracket you’re in, it’s important to be aware of standard deductions that are applied when calculating taxes. (This is separate from common payroll deductions, such as health insurance.) The standard deduction will lower your taxes owed.
For income earned in 2023, the standard deduction is $13,850 for unmarried people and for those who are married, filing separately; $27,700 for those married, filing jointly; $20,800 for heads of household. (There may be tax benefits to marriage beyond your bracket, by the way.)
There are additional deductions that may lower your taxable income, too, such as earmarking certain funds for retirement.
In addition to federal taxes, filers may also need to pay state income tax. The rate you will pay for state tax will depend on the state you live in. Some states also have brackets and a progressive rate. You may also need to pay local/city taxes.
Example of Tax Brackets
According to the 2023 tax brackets (the ones you’ll use when you file in 2024), an unmarried person earning $50,000 would pay:
10% on the first $11,000, or $1,100.00
12% on the next $33,725 ($44,725 – $11,000 = $33,725), or $4,047.00
22% on the next $5,275 ($50,000 – $44,775 = $5,275), or $1,160.50
Total federal tax due would be $1,100.00 + $4,047.00 + $1,160.50, or $6,307.50
This doesn’t take into account any deductions. Many Americans take the standard deduction (rather than itemize their deductions).
2023 Tax Brackets
Below are the tax rates for the 2024 filing season. Dollar amounts represent taxable income earned in 2023. Your taxable income is what you get when you take all of the money you’ve earned and subtract all of the tax deductions you’re eligible for.
Not sure of your filing status? This interactive IRS quiz can help you determine the correct status. If you qualify for more than one, it tells you which one will result in the lowest tax bill.
2023 Tax Brackets For Unmarried People
Tax rate of:
• 10% for people earning $0 to $11,000
• 12% for people earning $11,001 to $44,775
• 22% for people earning $44,726 to $95,375
• 24% for people earning $95,376 to $182,100
• 32% for people earning $182,101 to $231,250
• 35% for people earning $231,251 to $578,125
• 37% for people earning $578,126 or more
2023 Tax Brackets For Married People Who Are Filing Jointly
Tax rate of:
• 10% for people earning $0 to $22,000
• 12% for people earning $22,001 to $89,450
• 22% for people earning $89,451 to $190,750
• 24% for people earning $190,751 to $364,200
• 32% for people earning $364,201 to $462,500
• 35% for people earning $462,501 to $693,750
• 37% for people earning $693,751 or more
2023 Tax Brackets For Married People Who Are Filing Separately
Tax rate of:
• 10% for people earning $0 to $11,000
• 12% for people earning $11,001 to $44,725
• 22% for people earning $44,726 to $95,375
• 24% for people earning $95,376 to $182,100
• 32% for people earning $182,101 to $231,250
• 35% for people earning $231,251 to $346,875
• 37% for people earning $346,876 or more
2023 Tax Brackets For Heads of Household
Tax rate of:
• 10% for people earning $0 to $15,700
• 12% for people earning $15,701 to $59,850
• 22% for people earning $59,851 to $95,350
• 24% for people earning $95,351 to $182,100
• 32% for people earning $182,101 to $231,250
• 35% for people earning $231,251 to $578,100
• 37% for people earning $578,101 or more
Recommended: How Income Tax Withholding Works
Lowering Your 2023 Tax Bracket
You may be able to lower your income into another bracket (especially if your taxable income falls right on the cut-off points between two brackets) by taking tax deductions.
• Tax deductions lower how much of your income is subject to taxes. Generally, deductions lower your taxable income by the percentage of your highest federal income tax bracket. So if you fall into the 22% tax bracket, a $1,000 deduction would save you $220.
• Tax credits, such as the earned income tax credit, or child tax credit, can also reduce how you pay Uncle Sam but not by putting you in a lower tax bracket.
Tax credits reduce the amount of tax you owe, giving you a dollar-for-dollar reduction of your tax liability. A tax credit valued at $1,000, for instance, lowers your total tax bill by $1,000.
Many people choose to take the standard deduction, but a tax expert can help you figure out if you’d be better off itemizing deductions, such as your mortgage interest, medical expenses, and state and local taxes.
Whether you take the standard deduction or itemize, here are some additional ways you may be able to lower your tax bracket as you think ahead and prepare for tax season:
• Delaying income. For example, if you freelance, you might consider waiting to bill for services performed near the end of the 2023 until early in 2024.
• Making contributions to certain tax-advantaged accounts, such as health savings accounts and retirement funds, keeping in mind that there are annual contribution limits.
• Deducting some of your student loan interest. Depending on your income, you may be able to deduct up to $2,500 in student loan interest paid in 2023.
It can be a good idea to work with a CPA (certified public accountant) or tax advisor to see if you qualify for these and other ways to lower your tax bracket.
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The Takeaway
The government decides how much tax you owe by dividing your taxable income into seven chunks, also known as federal tax brackets, and each chunk gets taxed at the corresponding tax rate, from 10% to 37%.
The benefit of a progressive tax system is that no matter which bracket you’re in, you won’t pay that tax rate on your entire income. If you think you might get hit with a sizable tax bill, you may want to look into changing your paycheck withholdings or, if you’re a freelancer, making quarterly estimated tax payments.
You may also want to start putting some “tax money” aside each month, so you won’t have to scramble to pay any taxes owed when you file in April. An interest-bearing checking and savings account could be a good option for this purpose.
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FAQ
Has anything changed from 2022 to 2023 tax brackets?
Yes, the IRS has adjusted tax brackets for tax year 2023 to reflect the impact of inflation and other factors.
What is a marginal tax rate?
The marginal tax rate refers to the highest tax bracket that you possibly fall into. However, your effective tax rate averages the taxes you owe on all of your income earned. For this reason, your effective tax rate will likely be lower than your marginal rate.
How do deductions affect your tax bracket?
Deductions lower your taxable income. The more deductions that are taken, the more of your earnings are taxed at reduced brackets.
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