2022-2023 Federal Tax Brackets and Income Tax Rates

The first thing you need to know about federal tax brackets and income tax rates is that there are seven federal income tax rates. Those rates are 10%, 12%, 22%, 24%, 32%, 35%, and 37%. The federal tax rates typically don’t change unless Congress passes major tax legislation. For example, the Tax Cuts and Jobs Act  (sometimes known as the “Trump tax cuts”) lowered the top tax rate to 37% until 2025, when that rate is scheduled to revert to 39.6%). 

So, which federal tax rate applies to your income depends on federal income tax brackets that do change because the beginning and ending income amounts for each tax bracket are adjusted yearly for inflation. What does that mean for you?  

• Inflation-adjusted tax brackets mean you could end up in a higher or lower tax bracket each year, depending on your income. 
• And, you could pay a different tax rate on your income one year than you did the year before or the year after.

What are the federal tax brackets for 2023? 

The second thing you need to know about federal tax brackets and associated income tax rates is that the rates are “marginal” tax rates. A marginal rate is the tax rate that you pay on an additional dollar of income. For tax brackets and federal income tax rates, marginal tax rates mean that the rate associated with your tax bracket is the highest rate your taxable income will be subject to in a given tax year. 

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• As a result, all your income isn’t taxed at the tax rate tied to your tax bracket. 
• And the highest applicable federal tax rate for your tax bracket only applies to a portion of your income. (The rest of your income gets taxed at a lower rate or rates.)

So, before we show you the 2023 tax brackets, let’s consider some examples of how income tax brackets and marginal tax rates work.

More from Kiplinger:  States Sending Tax Rebate, 'Stimulus' Checks in 2023

How income tax brackets work with marginal tax rate examples

Suppose your filing status is single, and you have $100,000 taxable income in 2023. You might think that since $100,000 falls into the 24% federal bracket, your tax would be a flat $24,000. But thankfully, that’s not the case. Instead, your $100,000 will be taxed at a marginal tax rate so that only some of your income is taxed at the maximum rate for your income that year (24%). The rest of your income is taxed at the federal income rates below 24%, i.e., 10%, 12%, and 22%.

Here’s how the marginal tax rate works with this example:

• The first $11,000 of your income is taxed at the 10% rate.
• The next $33,724 of your income (i.e., the amount from $11,001 to $44,725, which will make sense when you see the tax brackets below) is taxed at the 12% federal rate.
• The next $50,649 of your income (from $44,726 to $95,375) is taxed at the 22% federal tax rate.
• That leaves $4,627 of your taxable income (the amount over $95,373) that is taxed at the 24% rate for your federal tax bracket.

You can see that the estimated total federal tax on your $100,000 of taxable income given marginal tax rates would be about $17,400. That is $6,600 less than if a flat 24% federal tax rate applied to your entire $100,000 of income. Remember: we're talking about federal tax. State tax rates and amounts due, if any, will vary.

This chart shows estimates of how much of your income would be taxed at each rate.

Total Estimated Tax: $17, 400

Here’s an illustration to help show how the marginal tax rate works with this example.

Take another example of someone single with a taxable income for 2023 of $40,000. You might think your tax would be $4,800 since $40,000 falls into the 12% federal bracket. But that’s not the case. Instead, your $40,000 will get taxed at a marginal tax rate, so only some of your income is taxed at the maximum tax rate for your income that year (12%). The rest of your income gets taxed at the federal income rate below 12%, i.e.,10%.

Here’s how the marginal tax rate works with this example:

• The first $11,000 of your income is taxed at the 10% tax rate.
• The next $28,999 of your income (i.e., the income between $11,001 to $44,725, which will make sense when you see the tax brackets below) gets taxed at the 12% federal rate.

The total estimated federal tax of $4,580 is still a bit ($220) lower than the $4,800 that you’d be taxed if a flat 12% federal rate applied to your $40,000 of income. 

This chart shows estimates of how much of your income would be taxed at each rate. Remember: we're talking about federal tax. State tax rates and amounts due, if any, will vary.

Total Estimated Tax: $4,579

Here’s an illustration to help show how the marginal tax rate works with this example.

Federal tax brackets based on filing status

Tax bracket ranges also differ depending on your filing status. For example, for 2023, the 22% tax bracket range for single filers is $44,726 to $95,375, while the same rate applies to head-of-household filers with taxable income from $59,851 to $95,350. 

Last year, for single filers, the 22% tax bracket started at $41,776 and ended at $89,075. However, for head-of-household filers, last year's tax bracket went from $55,901 to $89,050.

Federal tax brackets 2023 and rates

Here are the 2023 federal tax brackets and income tax rates for the four most common filing statuses.  Due to inflation, these brackets were adjusted significantly from the 2022 tax brackets (also included below). 

Also, some notes on inflation:

• If your income hasn’t changed much since 2022, you might still be in a lower tax bracket for 2023 because of the inflation adjustments.
• Inflation-adjusted tax brackets can help prevent “bracket creep,” which according to the Tax Foundation, “occurs when people are pushed into higher income tax brackets or have reduced value from credits and deductions due to inflation, instead of any increase in real income."
• So, when a tax bracket gets wider (i.e., there's more space between the high and low incomes for the bracket), there's less chance you will end up in a higher tax bracket when your income stays the same, or when it doesn't grow at the rate of inflation from one year to the next.

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2022 income tax brackets and rates

If you haven't yet filed your 2022 tax return (many people had extended IRS tax deadlines due to storms in several states) or just want to compare for 2023 tax planning, here are the former tax brackets and rates based on your filing status.  

More from Kiplinger: IRS 2023 Tax Deadlines Extended in Several States

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