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federal income tax brackets

The federal income tax rates remain unchanged for the 2021 and 2022 tax years: 10%, 12%, 22%, 24%, 32%, 35% and 37%. The income brackets, though, are adjusted slightly for inflation. Read on for more about the federal income tax brackets for Tax Year 2021 (due April 15, 2022) and Tax Year 2022 (due April 15, 2023). You can work with a financial advisor who specializes in taxes to craft a financial plan that takes advantage of your tax bracket.

The Federal Income Tax Brackets

The U.S. currently has seven federal income tax brackets, with rates of 10%, 12%, 22%, 24%, 32%, 35% and 37%. If you’re one of the lucky few to earn enough to fall into the 37% bracket, that doesn’t mean that the entirety of your taxable income will be subject to a 37% tax. Instead, 37% is your top marginal tax rate. You should note, however, that President Joe Biden has proposed raising the top bracket up to 39.6%.

With a marginal tax rate, you pay that rate only on the amount of your income that falls into a certain range. To understand how marginal rates work, consider the bottom tax rate of 10%. For single filers, all income between $0 and $9,950 is subject to a 10% tax rate. If you have $10,150 in taxable income, the first $9,950 is subject to the 10% rate and the remaining $200 is subject to the tax rate of the next bracket (12%). Check out the charts below to see what your top marginal tax rate is for tax years 2020 and 2021.

2021 Federal Income Tax Brackets (Deadline: April 18, 2022 or October 17, 2022)
Single Married Filing Jointly Married Filing Separately Head of Household
10% $0 – $9,950 $0 – 19,900 $0 – $9,950 $0 – $14,200
12% $9,951 – $40,525 $19,901 – $81,050 $9,951 – $40,525 $14,201 – $54,200
22% $40,526 – $86,375 $81,051 – $172,750 $40,526 – $86,375 $54,201 – $86,350
24% $86,376 – $164,925 $172,751 – $329,850 $86,376 – $164,925 $86,351 – $164,900
32% $164,926 – $209,425 $329,851 – $418,850 $164,926 – $209,425 $164,901 – $209,400
35% $209,426 – $523,600 $418,851 – $628,300 $209,426 – $314,150 $209,401 – $523,600
37% $523,601+ $628,301+ $314,151+ $523,601+
Federal Income Tax Bracket for 2022 (filing deadline: April 17, 2023)
Single Married Filing Jointly Married Filing Separately Head of Household
10% $0 – $10,275 $0 – $20,550 $0 – $10,275 $0 – $14,650
12% $10,276 – $41,775 $20,551 – $83,550 $10,276 – $41,775 $14,651 – $55,900
22% $41,776 – $89,075 $83,551 – $178,150 $41,776 – $89,075 $55,901 – $89,050
24% $89,076 – $170,050 $178,151 – $340,100 $89,076 – $170,050 $89,051 – $170,050
32% $170,051 – $215,950 $340,101 – $431,900 $170,051 – $215,950 $170,051 – $215,950
35% $215,951 – $539,900 $431,901 – $647,850 $215,951 – $539,900 $215,951 – $539,900
37% $539,901+ $647,851+ $539,901+ $539,901+

In rare cases, such as when one spouse is subject to tax refund garnishing because of unpaid debts to the state or federal government, opting for the “Married filing separately” tax status can be advantageous. Typically, though, filing jointly provides a tax break.

Only single people should use the single filing status. Single taxpayers who have dependents, though, should file as “Head of Household.” To qualify for this filing status, you must pay more than half of household expenses, be unmarried and have a qualifying child or dependent.

How Tax Brackets Work

In the U.S., income is taxed progressively with higher tax brackets than in most other nations. Not all income is treated equally, as the more you make the higher percentage you end up contributing in taxes. All brackets work on a taxable income basis, not necessarily the actual amount of money earned in a given year.

Once all deductions are accounted for, and tax credits awarded, then the income total that is leftover is your taxable income. That income falls into a tax bracket and you pay the percentage within that bracket.

If someone asks you for your tax bracket, the person is almost certainly asking for your top marginal tax rate. That’s why, when you’re reading the news, you’ll hear references to “filers in the top bracket” or maybe “taxpayers in the 37% bracket.” America’s top federal income tax bracket is varying over time quite a bit. It’s hard to believe now, but top federal income tax rates were once as high as 92%.

Understanding the Current Federal Income Tax Brackets

federal income tax brackets

Our current tax brackets were adjusted when Congress passed new legislation in 2017 that changed the brackets and how taxes are filed. The tax reform passed by President Trump and Congressional Republicans lowered the top rate for five of the seven brackets. It also increased the standard deduction to nearly twice its 2017 amount.

For the most recent taxes filed, for the 2021 tax year, the standard deduction was $12,550 for single filers and married filers who file separately. Joint filers will have a $25,100 deduction and heads of household get $18,800.

Bottom Line

federal income tax brackets

Tax filers will need the 2021 federal income tax brackets when they file taxes in 2022. Your top tax bracket doesn’t just depend on your salary. It also depends on other sources of income (such as interest and capital gains) and your deductions. Depending on where you fall within a tax bracket, deductions could knock you into a lower tax bracket, reducing money your tax liability (or increasing the size of your tax refund).

Tips for Tax Filing

  • If you’re precise with numbers and good at record-keeping, you’re probably fine using tax preparation software. But if you want help minimizing your tax liability, you can consider hiring a financial advisor who specializes in taxes. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
  • If you need more time to file your taxes, you can use Form 4868 to get a maximum extension of six months from the April 15 deadline (to October 15.) But remember, this extension does not apply to payments. So if you owe taxes, you should estimate what you owe and pay what you can to avoid a penalty and interest.

Photo credit: ©iStock.com/wernerimages, ©iStock.com/elenaleonova, ©iStock.com/Pgiam

Amelia Josephson
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