Nobody likes paying taxes, but they’re an unfortunate fact of life. Each April, you need to file your tax return to let the government know how much you made and to determine the total income tax that you owe. The US federal government income tax code uses tax brackets based on your income to determine how much you owe.
As your income increases, you pay a higher tax rate on some of your income. We’ll cover everything you need to know.
What is a Tax Bracket?
A tax bracket is a certain range of income and the corresponding tax rate that applies to that range of income.
👉 For Example
You could have a tax bracket applying to incomes from $0 to $50,000 with a tax rate of 15%. All income that falls into that range gets taxed at that rate.
Federal income taxes have many tax brackets with lower tax rates applying to lower levels of income and higher tax rates applying to higher levels of income.
Filing Status
Federal income taxes rely on various tax brackets that increase the tax rate on higher earners. However, to make things a bit more complicated, there are actually four sets of tax brackets based on your filing status.
Your personal situation determines your filing status, which determines which set of tax brackets applies to you. The four filing status options are:
- Single. This is for most individuals who are not married.
- Married, filing jointly. This is for most married people who file a joint tax return.
- Married, filing separately. This applies to married people who each file their own tax returns. Generally filing jointly is the better financial choice.
- Head of household. This is for unmarried people who have a qualifying child or dependent and who pay for more than half of their household’s expenses.
Each set of tax brackets uses the same tax rates, however, which incomes those rates apply to will vary.
2023 Tax Brackets
For 2023, federal income tax brackets are:
| Tax rate | Single | Married, filing jointly | Married, filing separately | Head of household |
|---|---|---|---|---|
| 10% | $0 to $11,000 | $0 to $22,000 | $0 to $11,000 | $0 to $15,700 |
| 12% | $11,001 to $44,725 | $22,001 to $89,450 | $11,001 to $44,725 | $15,701 to $59,850 |
| 22% | $44,726 to $95,375 | $89,451 to $190,750 | $44,726 to $95,375 | $59,851 to $95,350 |
| 24% | $95,376 to $182,100 | $190,751 to $364,200 | $95,376 to $182,100 | $95,351 to $182,100 |
| 32% | $182,101 to $231,250 | $364,201 to $462,500 | $182,101 to $231,250 | $182,101 to $231,250 |
| 35% | $231,251 to $578,125 | $462,501 to $693,750 | $231,251 to $346,875 | $231,251 to $578,100 |
| 37% | $578,126 or more | $693,751 or more | $346,876 or more | $578,101 or more |
2024 Tax Brackets
For 2024, federal income tax brackets were:
| Tax rate | Single | Married, filing jointly | Married, filing separately | Head of household |
|---|---|---|---|---|
| 10% | $0 to $11,600 | $0 to $23,200 | $0 to $11,600 | $0 to $16,550 |
| 12% | $11,601 to $47,150 | $23,201 to $94,300 | $11,601 to $47,150 | $16,551 to $63,100 |
| 22% | $47,151 to $100,525 | $94,301 to $201,050 | $47,151 to $100,525 | $63,101 to $100,500 |
| 24% | $100,526 to $191,950 | $201,051 to $383,900 | $100,526 to $191,950 | $100,501 to $191,950 |
| 32% | $191,951 to $243,725 | $383,901 to $487,450 | $191,951 to $243,725 | $191,951 to $243,700 |
| 35% | $243,726 to $609,350 | $487,451 to $731,200 | $243,726 to $365,600 | $243,701 to $609,350 |
| 37% | $609,351 or more | $731,201 or more | $365,601 or more | $609,350 or more |
A Common Misconception – Earning More Won’t Hurt You
There is a common misconception surrounding tax brackets that earning more can push you into a higher tax bracket, which can result in you losing money overall.
To use the 2023 tax brackets as an example, the misconception goes that if you’re earning $40,000 a year, you fall into the 12% tax bracket, making your tax bill $4,800. If you get a $5,000 raise, you now make $45,000 a year and wind up in the 22% tax bracket, making your tax bill $9,900, an increase in taxes of more than $4,000.
☝️ This is not true. The tax rates that correspond to each tax bracket apply to the income that falls within that range. Only the income that falls into the higher tax brackets is taxed at the higher rate.
👉 For Example
How it would really work is that if you make $40,000, the first $11,000 you earn is taxed at 10% because it falls into the 10% tax bracket. Income above $11,000 but below $44,725 is taxed at 12%. That means someone earning $40,000 would pay:
($11,000 * 10%) + (($40,000 - $11,000) * 12%) = $4,580
When you get a raise to $45,000, only the $274 of your earnings that falls into the 22% tax bracket gets taxed at the 22% tax rate, making your total tax bill:
($11,000 * 10%) + (($44,725−$11,000) * 12%) + (($45,000−$44,726) * 22%) = $5,120
Put simply, you don’t have to worry about increasing your earnings but taking less money home due to moving into a higher tax bracket.
How to Calculate Your Tax Bill
There are plenty of tax calculators out there, but if you want to calculate your tax bill on your own, it’s not so hard to do. You’ll need three pieces of information:
- Your income for the year
- Any deductions you can take
- Your filing status
Most people will benefit the most from taking the standard deduction, which lets you subtract a flat amount from your income before calculating taxes. The amount you subtract depends on your filing status. For 2024, the standard deduction is:
- Single: $14,600
- Married, filing jointly: $29,200
- Married, filing separately: $14,600
- Head of household: $21,900
Steps to Calculate Your Tax Bill
Time needed: 10 minutes
Follow these steps to calculate your tax bill
- Determine your taxable income
Take your income and subtract any deductions from that amount. This is your taxable income.
- Determine your filing status
Look at the tax brackets that correspond to your filing status.
- Calculate the tax amount for each tax bracket
Multiply the tax rates by the amount of income you have that falls into each bracket.
For example, if you’re a single filer who earned $40,000, you’ll multiply the first $11,000 you earned by 10% and the remainder of your income by 12%. - Sum up the number
Find the sum of those numbers to find your overall income tax bill.
Throughout the year, your employer should have withheld a portion of your income to pay taxes. If your tax bill is less than was withheld, you’ll get a refund when you file your return. If it’s more, you’ll owe money to the IRS. Thankfully, unless you owe a huge amount, all you have to do is send a payment along with your tax return.
