The seven federal income tax brackets for 2022 and 2023 are 10%, 12%, 22%, 24%, 32%, 35% and 37%. Your bracket depends on your taxable income, with higher earners paying a higher percentage of their income in taxes. The IRS adjusts the brackets annually for inflation, so the brackets for 2023 are slightly higher than they were for 2022.
Here are the federal income tax brackets for tax years 2022 and 2023, plus tips on how you can estimate your taxes based on your top-line income:
12%: $10,276 to $41,775 (single), $20,551 to $83,550 (married filing jointly)
22%: $41,776 to $91,450 (single), $83,551 to $181,700 (married filing jointly)
24%: $91,451 to $190,200 (single), $181,701 to $383,350 (married filing jointly)
32%: $190,201 to $357,000 (single), $383,351 to $716,700 (married filing jointly)
35%: $357,001 to $500,000 (single), $716,701 to $1,000,000 (married filing jointly)
37%: over $500,000 (single), over $1,000,000 (married filing jointly)
To estimate your taxes, start with your top-line income (gross income) and subtract deductions such as contributions to retirement accounts and charitable donations. Then use the IRS tax tables to find your tax liability based on your taxable income and filing status. Alternatively, you can use tax software or a tax professional to do the calculations for you.
Long-term capital gains tax and short-term capital gains tax are separate from the income tax brackets. Capital gains tax triggers when you sell an asset such as stocks or real estate for a profit. Long-term capital gains tax rates are lower than short-term rates for assets held more than a year. How each is calculated depends on your income and the type of asset you sold. To cut your capital gains tax bill, consider holding on to your assets for more than a year or donating appreciated assets to charity.
Unless you were granted a tax filing extension earlier this year, your next federal income tax return won't be due until April 15, 2024 for the 2023 tax year. This gives you plenty of time to plan and prepare your taxes for the upcoming year.
The IRS adjusted the 2023 federal income tax brackets higher based on inflation. Here's how your federal taxes may compare to 2022: If your income stays the same, you'll likely pay slightly more in taxes due to the higher brackets. However, if your income increases at the same rate as inflation, your tax rate may stay the same. If your income rises faster than inflation, you'll pay a higher percentage of your income in taxes.
There are seven tax brackets for most ordinary income for the 2022 tax year: 10 percent, 12 percent, 22 percent, 24 percent, 32 percent, 35 percent and 37 percent. However, some types of income are taxed differently. For example, qualified dividends and long-term capital gains are taxed at lower rates than ordinary income for most taxpayers.
Many states have lowered personal income tax rates for this year. Do you live in one? Check your state's tax website or consult a tax professional to see if you qualify for any state tax breaks or deductions.
Taxpayers could save on taxes because of a higher standard deduction and more generous thresholds for each bracket. For the 2023 tax year, the standard deduction is $12,950 for single filers and $25,900 for married couples filing jointly. This means you can deduct this amount from your taxable income, reducing your tax bill. Thresholds for each bracket have also increased, which means you may be able to earn more income before moving up to the next bracket.
Your income tax will go up, but there is more to the story. Read on for a closer look. While higher income tax brackets may seem like a burden, they fund important government services such as education, healthcare, and infrastructure. Additionally, some taxpayers may be eligible for tax credits or deductions that can offset their tax liability. By understanding the tax brackets and planning accordingly, you can minimize your tax bill and make the most of your income.
