The United States levies tax on its citizens and residents on their worldwide income. Non-resident aliens are taxed on their US-source income and income effectively connected with a US trade or business (with certain exceptions).
Personal income tax rates
For individuals, the top income tax rate for 2023 is 37%, except for long-term capital gains and qualified dividends (discussed below).
P.L. 115-97 reduced both the individual tax rates and the number of tax brackets. P.L. 115-97 sunsets after 2025 many individual tax provisions, including the lower rates and revised brackets, in order to comply with US Senate budget rules.
2023 income tax rates and brackets
Single taxpayers (1)
Taxable income (USD) | Tax rate (%) |
0 to 11,000 | 10 |
11,001 to 44,725 | 12 |
44,726 to 95,375 | 22 |
95,376 to 182,100 | 24 |
182,101 to 231,250 | 32 |
231,251 to 578,125 | 35 |
578,126+ | 37 |
Married taxpayers filing jointly (1, 2)
Taxable income (USD) | Tax rate (%) |
0 to 22,000 | 10 |
22,001 to 89,450 | 12 |
89,451 to 190,750 | 22 |
190,751 to 364,200 | 24 |
364,201 to 462,500 | 32 |
462,501 to 693,750 | 35 |
693,751+ | 37 |
Head-of-household taxpayers (1, 2)
Taxable income (USD) | Tax rate (%) |
0 to 15,700 | 10 |
15,701 to 59,850 | 12 |
59,851 to 95,350 | 22 |
95,351 to 182,100 | 24 |
182,101 to 231,250 | 32 |
231,251 to 578,100 | 35 |
578,101+ | 37 |
Married taxpayers filing separately (1)
Taxable income (USD) | Tax rate (%) |
0 to 11,000 | 10 |
11,001 to 44,725 | 12 |
44,726 to 95,375 | 22 |
95,376 to 182,100 | 24 |
182,101 to 231,250 | 32 |
231,251 to 346,875 | 35 |
346,876+ | 37 |
2022 income tax rates and brackets
Single taxpayers (1)
Taxable income (USD) | Tax rate (%) |
0 to 10,275 | 10 |
10,276 to 41,775 | 12 |
41,776 to 89,075 | 22 |
89,076 to 170,050 | 24 |
170,051 to 215,950 | 32 |
215,951 to 539,900 | 35 |
539,901+ | 37 |
Married taxpayers filing jointly (1, 2)
Taxable income (USD) | Tax rate (%) |
0 to 20,550 | 10 |
20,551 to 83,550 | 12 |
83,551 to 178,150 | 22 |
178,151 to 340,100 | 24 |
340,101 to 431,900 | 32 |
431,901 to 647,850 | 35 |
647,851+ | 37 |
Head-of-household taxpayers (1, 2)
Taxable income (USD) | Tax rate (%) |
0 to 14,650 | 10 |
14,651 to 55,900 | 12 |
55,901 to 89,050 | 22 |
89,051 to 170,050 | 24 |
170,051 to 215,950 | 32 |
215,951 to 539,900 | 35 |
539,901+ | 37 |
Married taxpayers filing separately (1)
Taxable income (USD) | Tax rate (%) |
0 to 10,275 | 10 |
10,276 to 41,775 | 12 |
41,776 to 89,075 | 22 |
89,076 to 170,050 | 24 |
170,051 to 215,950 | 32 |
215,951 to 323,925 | 35 |
323,926+ | 37 |
Notes
- The maximum federal income tax rate on ‘qualified dividends’ received from a domestic corporation is 20%. The maximum federal tax rate on capital gains is 20% for assets held for more than 12 months. The graduated rates of tax apply to capital gains from assets held for 12 months or less.
- Non-resident aliens may not take advantage of head of household status or joint return rates.
Alternative minimum tax (AMT)
In lieu of the tax computed using the above rates, the individual AMT may be imposed under a two-tier rate structure of 26% and 28%. For tax year 2022, the 28% tax rate applies to taxpayers with taxable incomes above USD 206,100 (USD 103,050 for married individuals filing separately). For tax year 2023, the 28% tax rate applies to taxpayers with taxable incomes above USD 220,700 (USD 110,350 for married individuals filing separately).
For 2022, the AMT exemption amount is USD 118,100 for married taxpayers filing a joint return (half this amount for married taxpayers filing a separate return) and USD 75,900 for all other taxpayers (other than estates and trusts), and the phase-out thresholds are USD 1,079,800 for married taxpayers filing a joint return and USD 539,900 for all other taxpayers (other than estates and trusts). For 2023, the AMT exemption amount is USD 126,500 for joint filers (half of this amount for married taxpayers filing a separate return), and USD 81,300 for all other taxpayers other than estates and trusts. The phase-out thresholds increase to USD 1,156,300 for joint filers and USD 578,150 for all other taxpayers other than estates and trusts.
The AMT is payable only to the extent it exceeds the regular net tax liability. The foreign tax credit is available for determining AMT liability to the extent of the foreign tax on the foreign-source AMT income (AMTI), subject to certain limitations.
AMTI generally is computed by starting with regular taxable income, adding tax preference deductions (claimed in the computation of regular taxable income), and making special adjustments to some of the tax items that were used to calculate taxable income. For example, the taxpayer must add back all state and local income taxes deducted in computing regular taxable income.
For non-resident aliens with a net gain from the sale of US real property interests, the AMT is calculated on the lesser of AMTI (before the exemption) or the net gain from the sale of the US real property interest.
Medicare contribution tax
For tax years beginning after 31 December 2012, a 3.8% 'unearned income Medicare contribution' tax applies on the lesser of (i) the taxpayer's net investment income for the tax year or (ii) the taxpayer's excess modified adjusted gross income over a threshold amount (generally, USD 200,000 forsingle taxpayers and heads of households; USD 250,000 for a married couple filing a joint return and surviving spouses; and USD 125,000 for a married individual filing a separate return). The tax, which is in addition to the regular income tax liability, applies to all individuals subject to US taxation other than non-resident aliens. Net investment income generally includes non-business income from interest, dividends, annuities, royalties, and rents; income from a trade or business of trading financial instruments or commodities; income from a passive-activity trade or business; and net gain from the disposition of non-business property.
State and local income taxes
Most states, and a number of municipal authorities, impose income taxes on individuals working or residing within their jurisdictions. Most of the 50 states impose some personal income tax, with the exception of Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming, which have no state income tax. New Hampshire and Tennessee (until 1 January 2021) tax only dividend and interest income. Few states impose an income tax at rates that exceed 10%.
As a tax expert with a deep understanding of the United States tax system, I can confidently provide insights into the various concepts outlined in the article.
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Worldwide Income Taxation: The United States adopts a worldwide income taxation system, meaning that both its citizens and residents are taxed on their global income.
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Non-Resident Alien Taxation: Non-resident aliens, however, are only taxed on their income derived from U.S. sources or income effectively connected with a U.S. trade or business, with some exceptions.
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Personal Income Tax Rates: For the tax year 2023, the top income tax rate for individuals is 37%. This rate applies to most income, except for long-term capital gains and qualified dividends, which have separate rates.
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Tax Cuts and Jobs Act (P.L. 115-97): The Tax Cuts and Jobs Act, P.L. 115-97, implemented significant changes to individual tax rates and brackets, lowering both. However, many provisions of this act, including the revised rates and brackets, are set to expire after 2025.
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Income Tax Rates and Brackets (2023): The article provides detailed information on the income tax rates and brackets for different filing statuses, including single taxpayers, married taxpayers filing jointly, head-of-household taxpayers, and married taxpayers filing separately.
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Alternative Minimum Tax (AMT): The AMT is an alternative tax calculation that may apply to individuals. It has a two-tier rate structure of 26% and 28%. The AMT exemption amounts and phase-out thresholds vary based on filing status.
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Medicare Contribution Tax: A 3.8% unearned income Medicare contribution tax applies to certain individuals with net investment income exceeding specified thresholds. This tax is in addition to regular income tax liability.
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Capital Gains and Dividend Tax Rates: The maximum federal income tax rate on qualified dividends is 20%. Similarly, the maximum federal tax rate on long-term capital gains is 20% for assets held for more than 12 months.
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State and Local Income Taxes: Most states and some municipal authorities impose income taxes on individuals residing or working within their jurisdictions. Notably, several states do not impose a state income tax, including Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming.
In conclusion, this information provides a comprehensive overview of the U.S. tax system, encompassing various aspects such as income tax rates, alternative minimum tax, Medicare contribution tax, and state and local income taxes.