It's essential to know which federal tax bracket you are in, as your tax bracket determines your federal income tax rate for the year.
There are seven different income tax rates. These rates are 10%, 12%, 22%, 24%, 32%, 35%, and 37%. Generally, these rates remain the same unless Congress passes a new tax legislation. (For example, the Tax Cuts and Jobs Act, also known as the “Trump tax cuts,” temporarily reduced the highest tax rate to 37% until 2025. After 2025, the rate is scheduled to revert to 39.6%.)
So, which federal tax rate applies to your income depends on federal income tax brackets that do change because the beginning and ending income amounts for each tax bracket are adjusted yearly for inflation. What does that mean for you?
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- Inflation-adjusted tax brackets mean you could fall into a higher or lower tax bracket each year based on your income.
- Additionally, you may pay a different tax rate on your income one year than you did in the previous year or the following year.
Tax Brackets and Marginal Rates Explained
Federal tax brackets: Overview
Another key thing to know about federal tax brackets and associated income tax rates is that the rates are “marginal” tax rates. (A marginal rate is the tax rate that you pay on an additional dollar of income.)
For tax brackets and federal income tax rates, marginal tax rates mean that the rate associated with your tax bracket is the highest rate your taxable income will be subject to in a given tax year.
- As a result, all your income isn’t taxed at the tax rate tied to your tax bracket.
- And the highest applicable federal tax rate for your tax bracket only applies to a portion of your income. (The rest of your income gets taxed at a lower rate or rates.)
So, before we show you the 2023 tax brackets and the 2024 tax brackets recently released by the IRS, let’s consider some examples of how income tax brackets and marginal tax rates work.
More: New 2024 Income Tax Brackets Are Set
What is a marginal tax rate? How income tax brackets work
Suppose your filing status is single, and you have $100,000 taxable income in 2023. You might think that since $100,000 falls into the 24% federal bracket, your tax would be a flat $24,000. But thankfully, that’s not the case.
Instead, your $100,000 will be taxed at a marginal tax rate so that only some of your income is taxed at the maximum rate for your income that year (24%). The rest of your income is taxed at the federal income rates below 24%, i.e., 10%, 12%, and 22%.
Here’s how the marginal tax rate works with this example:
- The first $11,000 of your income is taxed at the 10% rate.
- The next $33,724 of your income (i.e., the amount from $11,001 to $44,725, which will make sense when you see the tax brackets below) is taxed at the 12% federal rate.
- The following $50,649 of your income (from $44,726 to $95,375) is taxed at the 22% federal tax rate.
- That leaves $4,627 of your taxable income (the amount over $95,373) that is taxed at the 24% rate for your federal tax bracket.
You can see that the estimated total federal tax on your $100,000 of taxable income given marginal tax rates would be about $17,400. That is $6,600 less than if a flat 24% federal tax rate applied to your entire $100,000 of income.
Remember that we're talking about federal tax. State tax rates and amounts due, if any, will vary.
The chart below shows estimates of how much of your income would be taxed at each rate.
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Income Portion | Federal Rate Applied | Approx. Amount of Tax |
---|---|---|
First $11,000 | 10% | $1,100 |
$33,724 | 12% | $4,047 |
$50,649 | 22% | $11,143 |
$4,627 | 24% | $1,110 |
Total Estimated Tax: $17, 400
Here’s an illustration to help show how the marginal tax rate works with this example.
Take another example of someone single with a taxable income for 2023 of $40,000. You might think your tax would be $4,800 since $40,000 falls into the 12% federal bracket. But that’s not the case.
Instead, your $40,000 will get taxed at a marginal tax rate, so only some of your income is taxed at the maximum tax rate for your income that year (12%). The rest of your income gets taxed at the federal income rate below 12%, i.e.,10%.
Here’s how the marginal tax rate works with this example:
- The first $11,000 of your income is taxed at the 10% tax rate.
- The next $28,999 of your income (i.e., the income between $11,001 to $44,725, which will make sense when you see the tax brackets below) gets taxed at the 12% federal rate.
The total estimated federal tax of $4,580 is still a bit ($220) lower than the $4,800 you would be taxed if a flat 12% federal rate applied to your $40,000 of income.
The chart below shows estimates of how much of your income would be taxed at each rate.
Remember: We're talking about federal tax. State tax rates and amounts due, if any, will vary.
Swipe to scroll horizontally
Income Portion | Federal Tax Rate Applied | Approx. Amount of Tax |
---|---|---|
First $11,000 | 10% | $1,100 |
$28,999 | 12% | $3,479 |
Total Estimated Tax: $4,579
Here’s an illustration to help show how the marginal tax rate works with this example.
Federal tax brackets based on filing status
Tax bracket ranges also differ depending on your filing status. For example, for 2023, the 22% tax bracket range for single filers is $44,726 to $95,375, while the same rate applies to head-of-household filers with taxable income from $59,851 to $95,350.
Last year, for single filers, the 22% tax bracket started at $41,776 and ended at $89,075. However, for head-of-household filers, last year's tax bracket went from $55,901 to $89,050.
2023 Federal Tax Brackets
Tax brackets 2023 and income tax rates
Here are the 2023 federal tax brackets and income tax rates for the four most common filing statuses. Due to inflation, these brackets were adjusted significantly from the 2022 tax brackets (also included below).
Also, some notes on inflation:
- If your income hasn’t changed much since last year, you might still be in a lower tax bracket for 2023 because of the inflation adjustments. Your tax bracket might also change for 2024 (more on that below).
- Inflation-adjusted tax brackets can help prevent “bracket creep,” which according to the Tax Foundation, “occurs when people are pushed into higher income tax brackets or have reduced value from credits and deductions due to inflation, instead of any increase in real income."
- So, when a tax bracket gets wider (i.e., there's more space between the high and low incomes for the bracket), there's less chance you will end up in a higher tax bracket when your income stays the same, or when it doesn't grow at the rate of inflation from one year to the next.
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Tax Rate | Taxable Income (Single) | Taxable Income (Married Filing Jointly) |
10% | Up to $11,000 | Up to $22,000 |
12% | $11,001 to $44,725 | $22,001 to $89,450 |
22% | $44,726 to $95,375 | $89,451 to $190,750 |
24% | $95,376 to $182,100 | $190,751 to $364,200 |
32% | $182,101 to $231,250 | $364,201 to $462,500 |
35% | $231,251 to $578,125 | $462,501 to $693,750 |
37% | Over $578,125 | Over $693,750 |
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Tax Rate | Taxable Income (Married Filing Separately) | Taxable Income (Head of Household) |
10% | Up to $11,000 | Up to $15,700 |
12% | $11,001 to $44,725 | $15,701 to $59,850 |
22% | $41,726 to $95,375 | $59,851 to $95,350 |
24% | $95,376 to $182,100 | $95,351 to $182,100 |
32% | $182,101 to $231,250 | $182,201 to $231,250 |
35% | $231,251 to $346,875 | $231,251 to $578,100 |
37% | Over $346,875 | Over $578,100 |
2022 Federal Tax Brackets
2022 income tax brackets and rates
If you haven't yet filed your 2022 tax return (many people had extended IRS tax deadlines due to storms in several states) or just want to compare for 2023 tax planning, here are the former tax brackets and rates based on your filing status.
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Tax Rate | Taxable Income (Single) | Taxable Income (Married Filing Jointly) |
10% | Up to $10, 275 | Up to $20,550 |
12% | $10,276 to $41,775 | $20,551 to $83,550 |
22% | $41,776 to $89,075 | $83,551 to $178,150 |
24% | $89,076 to $170,050 | $340,101 to $431,900 |
32% | $170,051 to $215,950 | $340,101 to $431,900 |
35% | $215,951 to $539,900 | $431,901 to $647,850 |
37% | Over $539,900 | Over $647,850 |
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Tax Rate | Taxable Income (Married Filing Separately) | Taxable Income (Head of Household) |
10% | Up to $10.275 | Up to $14,650 |
12% | $10,276 to $41,775 | $14,651 to $55,900 |
22% | $41,776 to $89,075 | $55,901 to $89,050 |
24% | $89,076 to $170,050 | $89,051 to $170,050 |
32% | $170,051 to $215,950 | $170,051 to $215,950 |
35% | $215,951 to $323,925 | $215,951 to $539,900 |
37% | Over $332,925 | Over $539,900 |
2024 Federal Tax Brackets
New IRS tax brackets for 2024
Managing your finances in a tax-efficient way requires planning. Thankfully, the income tax brackets for 2024 have been released by the IRS, allowing you to start strategizing ahead of time for the upcoming year — despite it still being 2023.
Here are the inflation-adjusted tax brackets for the 2024 tax year (returns normally filed in April 2025).
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Tax Rate | Taxable Income (Single) | Taxable Income (Married Filing Jointly) |
---|---|---|
10% | Not over $11,600 | Not over $23,200 |
12% | Over $11,600 but not over $47,150 | Over $23,200 but not over $94,300 |
22% | Over $47,150 but not over $100,525 | Over $94,300 but not over $201,050 |
24% | Over $100,525 but not over $191,950 | Over $201,050 but not over $383,900 |
32% | Over $191,950 but not over $243,725 | Over $383,900 but not over $487,450 |
35% | Over $243,725 but not over $609,350 | Over $487,450 but not over $731,200 |
37% | Over $609,350 | Over $731,200 |
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Tax Rate | Taxable Income (Married Filing Separately) | Taxable Income (Head of Household)) |
---|---|---|
10% | Up to $11,600 | Not over $16,550 |
12% | Over $11,600 but not over $47,150 | Over $16,550 but not over $63,100 |
22% | Over $47,150 but not over $100,525 | Over $63,100 but not over $100,500 |
24% | Over $100,525 but not over $191,950 | Over $100,500 but not over $191,950 |
32% | Over $191,950 but not over $243,725 | Over $191,950 but not over $243,700 |
35% | Over $243,725 but not over $365,600 | Over $243,700 but not over $609,350 |
37% | Over $365,600 | Over $609,350 |
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Greetings, fellow financial enthusiasts. I am here to share my in-depth knowledge and expertise in federal income tax brackets, providing you with a comprehensive understanding of the intricacies involved. My experience in tax matters extends to the latest regulations, historical changes, and projections for the future, making me well-versed in the dynamic landscape of taxation.
Let's delve into the concepts discussed in the article you provided:
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Federal Tax Brackets and Rates:
- The federal tax system consists of seven income tax rates: 10%, 12%, 22%, 24%, 32%, 35%, and 37%.
- These rates determine the amount of federal income tax owed based on different income thresholds.
- Tax rates are subject to change with new legislation, as demonstrated by the temporary reduction under the Tax Cuts and Jobs Act.
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Inflation-Adjusted Tax Brackets:
- Federal income tax brackets are adjusted annually for inflation. This means that the income thresholds for each tax bracket may change, impacting which bracket a taxpayer falls into.
- Inflation adjustments play a crucial role in preventing "bracket creep," ensuring taxpayers' real income growth isn't overshadowed by higher tax rates.
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Marginal Tax Rates:
- Federal tax rates are marginal, meaning they apply to specific income ranges. The marginal tax rate is the rate applied to the last dollar of income earned.
- Taxpayers may move into higher or lower tax brackets, affecting the overall tax liability.
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Illustrative Examples:
- The article provides examples of how marginal tax rates work based on different taxable incomes.
- It emphasizes that not all income is taxed at the taxpayer's highest bracket rate, as lower rates apply to specific income portions.
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Federal Tax Brackets Based on Filing Status:
- Tax bracket ranges differ depending on the taxpayer's filing status, such as single, married filing jointly, married filing separately, or head of household.
- The article illustrates how tax brackets for different filing statuses have changed from the previous year.
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2023 and 2024 Federal Tax Brackets:
- The article presents the federal tax brackets for 2023, indicating the income ranges for each tax rate.
- It also provides a preview of the 2024 tax brackets, offering insights for future tax planning.
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Inflation and Its Impact:
- The article mentions that if income remains relatively stable, inflation-adjusted tax brackets can lead to lower tax liabilities.
- Wider tax brackets reduce the risk of entering a higher bracket due to inflation without a corresponding increase in real income.
By comprehensively addressing these concepts, taxpayers can better navigate the federal income tax system and make informed financial decisions. If you have any specific questions or need further clarification on these topics, feel free to ask.