Everything you need to know about tax brackets

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Once tax time rolls around one of the most important things you need to know is what bracket you fall into. These brackets are used to figure out what tax rates you will be paying. This article will go over how to figure out which tax bracket you are in and some other helpful tips that will make tax season go a little smoother.

Let’s start at the beginning

In order to determine where you fall on the tax brackets, you first have to decide how you are filing. Are you single? Are you married and filing separately? Are you married and filing jointly or a qualifying widow(er)? Or are you filing as the head of household? The tax brackets are split up into each of these statuses, so knowing how you plan to file is important for figuring out your tax rate.

2022 Tax Brackets

The table below is the IRS 2022 tax brackets that will be used for filing your taxes in 2023.

Tax Rate Single Filers Married Filing Jointly or qualifying widow(er) 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+

Using the brackets

You see the tax bracket table above, but how do you use it? It may look intimidating with all those numbers listed out, but since we already figured out our filing status, we can focus on just one column. So how do you figure out which row to look at? Well, first you need to know your taxable income, which is your earnings minus the tax deductions you are eligible for. Once you know your taxable income amount, you can use the table to determine your tax rates and the total tax amount due.

Tax Bracket Example

Using the tax brackets can be challenging, so let’s look at an example. You are filing as an individual single filer. You figured out all of your tax exemptions and are left with a taxable income amount of $47,650. Looking at the table, you may notice your tax rate is 22%, but that is only your marginal tax rate. The marginal tax rate is the highest tax rate you pay, you will not be paying 22% on the entire $47,650. The first $10,275 of your income would be taxed at 10%, the next chunk until $41,775 would be taxed at 12%, and the last few thousand would be taxed at 22%.

The IRS provides a tax table for each filing status to streamline the calculation process. For individual single filers in 2022, the following information is provided.

INDIVIDUAL SINGLE FILERS
If your taxable income is: The tax due amount is:
Not over $10,275 10% of your taxable income
Over $10,275 but not over $41,775 $1,027.50 plus 12% of the amount over $10,275
Over $41,775 but not over $89,075 $4,807.50 plus 22% of the amount over $41,775
Over $89,075 but not over $170,050 $15,213.50 plus 24% of the amount over $89,075
Over $170,050 but not over $215,950 $34,647.50 plus 32% of the amount over $170,050
Over $215,950 but not over $539,900 $49,335.50 plus 35% of the amount over $215,950
Over $539,900 $162,718 plus 37% of the amount over $539,900

As stated above, for this example your taxable income is $47,650. We know that falls in the “Over $41,775 but not over $89,075” row. Let’s plug in our numbers and determine the total tax amount due.

Total tax due = $4,807.50 + 22% of (47,650-41,775)
= $4,807.50 + 22% of (5,875)
= $4,807.50 + 1,292.50
Total tax due = $6,100

The total amount of tax due would be $6,100.

2022 Tax Tables

Since you may not be an individual filing as single, let’s look at the rest of the tax tables.

Note, it is important to be aware that these tables are for income tax only. The IRS provides separate tables for capital gains.

The Married Filing Jointly or Qualifying Widow(er) status is for those who are married and agree to file a joint return or those who are considered a qualifying widow(er).

MARRIED FILING JOINTLY (OR QUALIFYING WIDOW(ER))
If your taxable income is: The tax due amount is:
Not over $20,550 10% of your taxable income
Over $20,550 but not over $83,550 $2,055 plus 12% of  the amount over $20,550
Over $83,550 but not over $178,150 $9,615 plus 22% of  the amount over $83,550
Over $178,150 but not over $340,100 $30,427 plus 24% of  the amount over $178,150
Over $340,100 but not over $431,900 $69,295 plus 32% of the amount over $340,100
Over $431,900 but not over $647,850 $98,671 plus 35% of the amount over $431,900
Over $647,850 $174,253.50 plus 37% of  the amount over $647,850

If you are Married Filing Separately, you would use the following table to calculate your tax amount.

MARRIED FILING SEPARATELY
If your taxable income is: The tax due amount is:
Not over $10,275 10% of your taxable income
Over $10,275 but not over $41,775 $1,027.50 plus 12% of the amount over $10,275
Over $41,775 but not over $89,075 $4,807.50 plus 22% of the amount over $41,775
Over $89,075 but not over $170,050 $15,213.50 plus 24% of the amount over $89,075
Over $170,050 but not over $215,950 $34,647.50 plus 32% of the amount over $170,050
Over $215,950 but not over $323,925 $49,335.50 plus 35% of the amount over $215,950
Over $323,925 $87,126.75 plus 37% of the amount over $323,925

To be eligible for the Head of Household status, you must be single, have paid more than half of the cost of maintaining a home for the year, and have lived with a qualifying person for more than half of the year. If you can be considered Head of Household, you would use the following table.

HEAD OF HOUSEHOLD
If your taxable income is: The tax due amount is:
Not over $14,650 10% of your taxable income
Over $14,650 but not over $55,900 $1,465 plus 12% of the amount over $14,650
Over $55,900 but not over $89,050 $6,415 plus 22% of the amount over $55,900
Over $89,050 but not over $170,050 $13,708 plus 24% of the amount over $89,050
Over $170,050 but not over $215,950 $33,148 plus 32% of the amount over $170,050
Over $215,950 but not over $539,900 $47,836 plus 35% of the amount over $215,950
Over $539,900 $161,218.50 plus 37% of the amount over $539,900

When should these tax brackets and tables be used?

This article showed the tax brackets and tables you will use when filing your 2022 taxes at the beginning of the year 2023. These brackets and tables are updated yearly by the Internal Revenue Service. This is due to inflation. The IRS does not want someone to be pushed into a higher tax bracket due to inflation, so they update the figures yearly.

However, due to a tax reform passed in 2017 (The Tax Cuts and Jobs Act), your chances of being pushed into a higher tax bracket will increase every year. This is because the reform changed the way the IRS calculates inflation. This means you need to pay close attention to the figures every year to be sure you are using the correct tax rates to calculate your tax amount.

Tax Deductions

Another way the IRS attempts to prevent you from being pushed into a higher tax bracket is by updating certain deductions every year. As we said earlier in the article, your taxable income is your earnings minus applicable tax deductions. The most common deduction is the standard deduction.

The Standard Deduction

The standard deduction is a specific amount that is applied to reduce your total taxable income. This specific amount is updated every year, just like the tax brackets. For 2022, the standard deduction amounts are as follows:

Filing Status Deduction Amount Change from 2021
Single Individual $12,950 Up $400
Married Filing Jointly $25,900 Up $800
Married Filing Separately or qualifying widow(er) $12,950 Up $400
Head of Household $19,400 Up $600

Tax Credits

Tax credits are a little different than deductions. Instead of reducing your taxable amount, they reduce the total tax due amount calculated. Some tax credits that may apply to you are:

Earned Income Credit

The maximum credit taxpayers with three or more qualifying children could see is $6,935, which is up $207 from last year’s maximum amount. The actual credit you can receive depends on your filing status and the number of qualifying children.

Adoption Credit

To determine your adoption credit, the maximum amount of qualified adoption expenses increased to $14,890 (up $450 from 2021).

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