Friday, 2 June 2023
Updated on Thursday, December 23, 2021
For 2021 and 2022, there are seven tax brackets you could fall into: 10%, 12%, 22%, 24%, 32%, 35% and 37%. Your tax bracket will depend on your filing status and your taxable income for that year. The higher your taxable income is, the higher your federal tax rate will be — but what you owe will ultimately come down to the brackets in which that taxable income appears.
It’s important to know which bracket your income falls into, as it’s a critical component of the tax bill you’ll face each year. This article covers everything you need to know about the federal income tax rates for 2021 and 2022.
The table below outlines the 2021 federal income tax brackets for taxes that are filed in 2022. The taxable income dollar amounts represent income earned in 2021.
| 2021 Federal Income Tax Brackets for Single Filers, Married Couples Filing Jointly, Married Filing Separately and Head of Households | ||||
|---|---|---|---|---|
| Tax Rate | Single | Married filing jointly (or surviving spouses) | Married filing separately | Head of household |
| 10% | Up to $9,950 | Up to $19,900 | Up to $9,950 | Up to $14,200 |
| 12% | $9,951 to $40,525 | $19,901 to $81,050 | $9,951 to $40,525 | $14,201 to $54,200 |
| 22% | $40,526 to $86,375 | $81,051 to $172,750 | $40,526 to $86,375 | $54,201 to $86,350 |
| 24% | $86,376 to $164,925 | $172,751 to $329,850 | $86,376 to $164,925 | $86,351 to $164,900 |
| 32% | $164,926 to $209,425 | $329,851 to $418,850 | $164,926 to $209,425 | $164,901 to $209,400 |
| 35% | $209,426 to $523,600 | $418,851 to $628,300 | $209,426 to $314,150 | $209,401 to $523,600 |
| 37% | Over $523,600 | Over $628,300 | Over $314,150 | Over $523,600 |
The deadline for filing taxes and making payments for the year 2021 is April 18, 2022. For those who have received an extension, the deadline is October 15, 2022.
The table below outlines the 2022 federal income tax brackets for taxes that are filed in 2023. The taxable income dollar amounts represent income earned in 2022.
| 2022 Federal Income Tax Brackets for Single Filers, Married Couples Filing Jointly, Married Filing Separately and Head of Households | ||||
|---|---|---|---|---|
| Tax Rate | Single | Married filing jointly (or surviving spouses) | Married filing separately | Head of household |
| 10% | Up to $10,275 | Up to $20,550 | Up to $10,275 | Up to $14,650 |
| 12% | $10,276 to $41,775 | $20,551 to $83,550 | $10,276 to $41,775 | $14,651 to $55,900 |
| 22% | $41,776 to $89,075 | $83,551 to $178,150 | $41,776 to $89,075 | $55,901 to $89,050 |
| 24% | $89,076 to $170,050 | $178,151 to $340,100 | $89,076 to $170,050 | $89,051 to $170,050 |
| 32% | $170,051 to $215,950 | $340,101 to $431,900 | $170,051 to $215,950 | $170,051 to $215,950 |
| 35% | $215,951 to $539,900 | $431,901 to $647,859 | $215,951 to $539,900 | $215,951 to $539,900 |
| 37% | Over $539,000 | Over $647,850 | Over $539,000 | Over $539,900 |
The chart below outlines the standard deductions (that apply in most cases) for taxable income made in 2021, for taxes due in 2022. Standard deductions are set amounts that taxpayers can deduct from their taxable income every year, instead of itemizing their deductions. This, in turn, lowers their overall tax bill.
The amount of your standard deduction is dependent on your filing status, and it changes on an annual basis due to inflation.
| Standard Deductions for 2021 | |
|---|---|
| Filing status | Standard deduction |
| Single | $12,550 |
| Married filing jointly (or surviving spouses) | $25,100 |
| Married filing separately | $12,550 |
| Head of household | $18,800 |
The chart below outlines the standard deductions (that apply in most cases) for taxable income made in 2022, for taxes due in 2023.
| Standard Deductions for 2022 | |
|---|---|
| Filing status | Standard deduction |
| Single | $12,950 |
| Married filing jointly (or surviving spouses) | $25,900 |
| Married filing separately | $12,950 |
| Head of household | $19,400 |
The highest tax bracket that you fall into, known as your marginal tax rate, is dependent on your filing status and taxable income. The IRS adjusts tax brackets on an annual basis to account for inflation, and to prevent people from being pushed into higher-income brackets despite not actually having an increase in income earned.
The U.S. has a progressive tax system, with the intention that people with higher incomes pay more in taxes. Different amounts of your income are taxed at different rates, which is determined by the seven brackets outlined in the tables above.
For example, if you’re single and make $50,000, in 2021, you will pay 10% on your income up to $9,950, 12% on the chunk of your income that’s between $9,951 to $40,525, and then 22% on the rest of your income that’s between $40,526 to $50,000. So, while your marginal tax rate is 22% (the highest tax bracket your income qualifies for), your effective tax rate is really lower, as it is the actual percentage of your income that’s paid to the IRS.
While there’s no getting around paying taxes, there are strategies you can use to lower your taxable income. An accountant or a financial advisor can also give the advice to lower your tax burden. Strategies to lower your taxable income include:
The “Find a Financial Advisor” links contained in this article will direct you to web pages devoted to MagnifyMoney Advisor (“MMA”). After completing a brief questionnaire, you will be matched with certain financial advisers who participate in MMA’s referral program, which may or may not include the investment advisers discussed.
Source: https://www.magnifymoney.com/blog/investing/federal-income-tax-brackets/
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