What is my tax bracket? 2022-2023 Federal Tax Brackets and How Marginal Tax Rates Work

Below we offer two tables of Federal income tax brackets for the current year, 2022. (These are the brackets that will be used for the tax return that you file in 2023.) The tables also show what you may expect to pay based on your Taxable Income, which is found on Line 15 of your Form 1040 tax return. Look below the tables for a further explanation of how your taxes are calculated, because the U.S. uses a marginal tax rate system that means it’s not as simple as multiplying your income by your tax bracket to estimate your taxes!

If you will file as a Single Taxpaper:

 

If your taxable income is… Your tax bracket is… Your taxes due will be…
$1 – $10,275 10% 10% of your taxable income
$10,276 – $41,775 12% $1027.50 + 12% of the amount over $10,275
$41,776 – $89,075 22% $4807.50 + 22% of the amount over $41,775
$89,076 – $170,050 24% $15,213.50 + 24% of the amount over $89,075
$170,051 – $215,950 32% $34,647.50 + 32% of the amount over $170,050
$215,951 – $539,900 35% $49,335.50 + 35% of the amount over $215,950
$539,901 or higher 37% $162,718 + 37% of the amount over $539,900



If you will file as Married Filing Jointly:

 

If your taxable income is… Your tax bracket is… Your taxes due will be…
$1-$20,550 10% 10% of your taxable income
$20,551-$83,550 12% $2055 + 12% of the amount over $20,550
$83,551-$178,150 22% $9615 + 22% of the amount over $83,550
$178,151-$340,100 24% $30,427 + 24% of the amount over $178,150
$340,101-$431,900 32% $69,295 + 32% of the amount over $340,100
$431,901-$647,850 35% $98,671 + 35% of the amount over $431,900
$647,851 or higher 37% $174,253.50 + 37% of the amount over $647,850

Example (simplified, see note below calculations):

If your Taxable Income (Line 15 on 1040) is $95,000 and you file as a single taxpayer for 2022, your tax bracket would be 24% and you’d owe $16,635.50 in taxes. (Technically $16,636 because the IRS only deals in whole numbers, so you’d round up in this case.)

How do we get that number? Looking at the first table above, everything above $89,075 is taxed at a 24% interest rate. The difference between $95,000 and $86,375 is $5925. Only that $5925 difference is taxed at 24%; everything below $89,075 is taxed at a lower rate. So, we take the $5925 and multiply it by 0.24 (24%) to get $1422. And then we add $1422 to the $15,213.50 shown in the table at the top of this page to get $16,635.50 ($16,636 when rounded) as the total tax.

NOTE: This is a simplified example! It assumes a very straightforward tax return with very few special circumstances. In reality, most people will have adjustments even beyond their Taxable Income calculation, because a taxpayer could have not just employment income but also capital gains taxes, with each of those being taxed at different rates. Also, child tax credits could be applicable. In addition, if the person was self-employed, a self-employment tax would be added to the total tax due. So, looking at tax brackets will give you a ballpark estimate of what you will pay, but the more complicated your sources of income, family situation, etc., the harder it is to simply eyeball the tax brackets to estimate your tax burden.

Why Are My Taxes LESS Than My Tax Bracket? A Word on Marginal Tax Rates

As you read the example above, you may have noticed that paying $16,636 on $95,000 in taxable income means you’d only pay about 17.5% in taxes. But when you look at a $95,000 taxable income in the table, it appears you are in the 24% tax bracket. How does that work?

Well, in reality, most people don’t have just one tax bracket. Instead, what we think of as your tax bracket is actually your highest tax bracket, the highest amount any of your income will be taxed at. But for most people, a good chunk of their income is taxed at a lower rate. That’s why the term marginal tax rates is used by the IRS — it means the tax rate on the LAST dollar earned, NOT ALL of the dollars. Each piece of your income is taxed at a different rate. This is why most people can’t simply look at their income and multiply it by a tax bracket — if you did that, you’d be estimating too high!

Looking again at the table for 2022 and assuming the $95,000 taxable income, the first $10,275 in income would only be taxed at 10%, the next $31,500 would be taxed at 12%, the next $47,300 would be taxed at 22%, and only the final $5925 would be taxed at the 24% rate. Taking that into consideration, the overall taxes calculate out to $16,636, or a 17.5% effective tax rate.

These Are Only FEDERAL Tax Brackets!

Remember that, unfortunately, your federal tax burden is only part of your overall income tax burden. Depending on where you live in the United States, you may also have state income taxes and/or local income taxes. (And don’t get us started on non-income taxes like property taxes!)


Author: Adam Jusko


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