Email FacebookTwitterMenu burgerClose thin

Federal Income Tax Brackets for Tax Year 2023

SmartAsset: Federal Income Tax Brackets for Tax Year 2023

The federal income tax rates remain unchanged for the 2023 tax year at 10%, 12%, 22%, 24%, 32%, 35% and 37%. The income thresholds for each bracket, though, are adjusted slightly every year for inflation. Here’s a breakdown that will show the differences between tax year 2022 (filed by April 17, 2023) and tax year 2023 (filed by April 15, 2024).

A financial advisor can help you optimize your financial plan to lower your tax liability.

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.

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 $11,000 is subject to a 10% tax rate. If you have $11,200 in taxable income, the first $11,000 is subject to the 10% rate and the remaining $200 is subject to the tax rate of the next bracket (12%).

Check out the chart below to see what your top marginal tax rate is for the tax year 2023, which will be filed in 2024:

RateSingleMarried Filing JointlyMarried Filing SeparatelyHead of Household
10%$0 – $11,000$0 – $22,000$0 – $11,000$0 – $15,700
12%$11,001 – $44,725$22,001 – $89,450$11,001 – $44,725$15,701 – $59,850
22%$44,726 – $95,375$89,451 – $190,750$44,726 – $95,375$59,851 – $95,350
24%$95,376 – $182,100$190,751 – $364,200$95,376 – $182,100$95,351 – $182,100
32%$182,101 – $231,250$364,201 – $462,500$182,101 – $231,250$182,101 – $231,250
35%$231,251 – $578,125$462,501 – $693,750$231,251 – $346,875$231,251 – $578,100

Now, for a comparison, here is the chart with tax brackets for the 2022 tax year, which are due in 2023:

SingleMarried Filing JointlyMarried Filing SeparatelyHead 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 – $323,925$215,951 – $539,900

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 Federal 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.

The easiest thing to do is to use SmartAsset’s free income tax calculator, but here are some tips to keep in mind if you’re estimating your own taxes:

  • Actual taxes paid: The tax you owe could vary based on where your income comes from and how it is broken up. Your entire income won’t necessarily be taxed at your tax bracket rate.
  • Income thresholds: The income thresholds for the federal tax brackets are updated and could change, annually. This is done to account for inflation.
  • Effective tax rate: Your effective tax rate is the percentage of your taxable income that you’ll pay in taxes. You can calculate this by dividing your tax owed by your total income. This is what you’ll actually pay.
  • 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

    SmartAsset: Federal Income Tax Brackets for Tax Year 2023

    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 2023 tax year, which will get filed in 2024, the standard deduction is $13,850 for single filers and married filers who file separately. Joint filers will have a $27,700 deduction and heads of household get $20,800. For the 2022 tax year, which is due in 2023, the standard deductions are $12,950, $25,900 and $19,400, respectively.

    Bottom Line

    SmartAsset: Federal Income Tax Brackets for Tax Year 2023

    Tax filers will need the 2023 federal income tax brackets when they file taxes in 2024. 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 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 to minimize your tax liability, a financial advisor can help. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel 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: ©, ©, ©

      load more callback