IRS Tax Brackets: Here’s How Much You’ll Pay in 2023 on What You Earned in 2022
Tax brackets are the government’s way of ensuring that taxpayers who earn more money pay more in taxes. Each bracket consists of a tax rate that’s applied to taxable income within a specific range. Those income ranges vary according to filing status — the range for a single filer is different than the range for someone filing as head of household, for example.
Read: 3 Ways Smart People Save Money When Filing Their Taxes
What Is My Tax Bracket?
Your federal income tax bracket is based on your tax filing status and your income. To help you quickly figure out which IRS income tax bracket you’re in, check the IRS federal tax table for tax year 2022:
2022 Federal Tax Brackets for Income Taxes Filed by April 18, 2023 | ||||
|---|---|---|---|---|
Tax Bracket | Single | Married Filing Jointly or Qualifying Widow(er) | Married Filing Separately | Head of Household |
10% | $0 to $10,275 | $0 to $25,550 | $0 to $10,275 | $0 to $14,650 |
12% | $10,276 to $41,775 | $25,551 to $83,550 | $10,276 to $41,775 | $14,651 to $55,900 |
22% | $41,776 to $89,075 | $83,551 to $178,150 | $41,776 to $89,075 | $55,901 to $89,050 |
24% | $89,076 to $170,050 | $178,151 to $340,100 | $89,076 to $170,050 | $89,051 to $170,050 |
32% | $170,051 to $215,950 | $340,101 to $431,900 | $170,051 to $215,950 | $170,051 to $215,950 |
35% | $215,951 to $539,900 | $431,901 to $647,850 | $215,951 to $323,925 | $215,951 to $539,900 |
37% | $539,901 or more | $647,851 or more | $323,926 or more | $539,901 or more |
What Is a Tax Bracket?
The U.S. uses federal income tax brackets to determine your tax liability. IRS tax brackets are divided based on your taxable income level, with different incomes taxed at different federal income tax rates. There are seven brackets in 2022, ranging from 10% to 37%.
How Tax Brackets Work
The IRS applies tax brackets to your adjusted gross income — the taxable amount that remains after deductions, credits and exemptions. But because tax rates are tiered, the rate for a particular tax bracket only applies to the amount of income within that bracket. So if you have more than $10,275 in taxable income, only the first $10,275 is taxed at the 10% rate. The rest is taxed at the rate for whichever bracket the amount falls into.
Take, for example, a single filer with an adjusted gross income of $60,000. Although $60,000 falls within the 22% tax bracket, only income that falls within the range for the 22% bracket gets taxed at the 22% rate. The first $10,275 is taxed at 10%. The next $31,499, which is the amount represented by the 12% bracket ($41,775 – $10.276 = $31,499), is taxed at 12%. The last $18,224 ($60,000 – $41,776) is taxed at 22%.
How Did Tax Brackets Change From 2021?
Although the tax rate for each bracket hasn’t changed for 2022 — and won’t change for tax year 2023 — the IRS made adjustments for inflation that increase the amount of income you can have before you’re pushed into the next bracket. Whereas a single filer earning $10,000 fell into the 12% tax bracket in 2021, for example, they’re in the 10% bracket for 2022.
2021 Federal Tax Brackets for Income Taxes Filed by April 18, 2022 | ||||
|---|---|---|---|---|
Tax Bracket | Single | Married Filing Jointly or Qualifying Widow(er) | Married Filing Separately | Head of Household |
10% | $0 to $9,950 | $0 to $19,900 | $0 to $9,950 | $0 to $14,200 |
12% | $9,951 to $40,525 | $19,901 to $81,050 | $9,951 to $40,525 | $14,201 to $54,200 |
22% | $40,526 to $86,375 | $81,051 to $172,750 | $40,526 to $86,375 | $54,201 to $86,350 |
24% | $86,376 to $164,925 | $172,751 to $329,850 | $86,376 to $164,925 | $86,351 to $164,900 |
32% | $164,926 to $209,425 | $329,851 to $418,850 | $164,926 to $209,425 | $164,901 to $209,400 |
35% | $209,426 to $523,600 | $418,851 to $628,300 | $207,351 to $314,150 | $209,401 to $523,600 |
37% | $523,601 or more | $628,301 or more | $314,151 or more | $523,601 or more |
What Is a Marginal Tax Rate?
Your marginal tax rate is the tax rate that applies to your last $1 of adjusted gross income. In the example above, the last $1 fell within the 22% tax bracket, so the marginal tax rate is 22%.
What Is an Effective Tax Rate?
An effective tax rate is the average rate you pay on your adjusted gross income. To calculate it, you would divide your total tax bill by your taxable income. Keep in mind that the final rate is always lower than your marginal tax rate.
Knowing your effective tax rate can help you estimate your federal tax liability, but it doesn’t provide the information you need to calculate how much tax you should have withheld from your pay. For that, use the IRS tax withholding estimator to compare your options — married filing jointly vs. married filing separate returns, for example. Then use the most favorable scenario to fill out a Form W-4. Your employer will calculate the correct withholding based on your preferences.
How Can I Lower My Tax Bracket?
You might be able to lower your tax bracket by reducing your taxable income. The IRS gives you several ways to do that:
Claim all the legal deductions you’re entitled to, such as such as charitable donations, home business costs and some education-related expenses.
Contribute to tax-deferred retirement accounts such as a 401(k) or an individual retirement account.
Claim any tax credits you qualify for, such as the child tax credit, earned income tax credit and credit for qualified educational expenses and retirement savings contributions.
If you’re married, calculate your taxes using both filing statuses — married filing jointly and married filing separately — and compare the results. In some cases, one status results in a lower tax liability than the other.
FAQ
Here are the answers to some of the most frequently asked questions about taxes.
What are the 2022 tax brackets for married and filing jointly?
The 2022 federal tax brackets for filers who are married and filing jointly are as follows:
-10% for incomes between $0 and $25,550.
-12% for incomes between $25,551 and $83,550.
-22% for incomes between $83,551 and $178,150.
-24% for incomes between $178,151 and $340,100.
-32% for incomes between $340,101 and $431,900.
-35% for incomes between $431,901 and $647,850.
-37% for incomes of $647,851 or more.
How much should be taken out of your paycheck for taxes?
The amount of taxes that are taken out of your paycheck depends on how many allowances you claimed on your W-4. If you claimed zero, you indicated that you want the most amount of tax taken out of your pay each period. Claiming one means less tax is taken out. The ideal amount would come down to your budgeting needs and personal preference.
What do you owe in taxes if you made $120,000?
The best way to find out what you owe before filing your taxes is to use a tax calculator or speak to a tax professional since many factors can impact your final number.
Krista Baum and John Csiszar contributed to the reporting for this article.
This article originally appeared on GOBankingRates.com: IRS Tax Brackets: Here’s How Much You’ll Pay in 2023 on What You Earned in 2022
