Did you know not everyone or every dollar earned is taxed the exact same amount?
This is because the United States tax system aims to be progressive. A progressive tax system tries to collect more tax from those who earn more. In essence, a million dollar earner pays more total tax, as well as a higher percentage of their income in tax, than someone who earns far less.
What is a Tax Bracket?
One of the ways our tax system achieves this is through tax brackets. A tax bracket is simply a range of incomes that are taxed at a set rate based on your taxable income.
There are seven tax brackets of varying size, with the lowest bracket being subject to a 10% marginal tax rate and the highest being subject to 37% marginal tax rate. Your marginal tax rate will be dependent upon your taxable income within the brackets.
How Do I Know What Tax Bracket I’m In?
Let’s see how this works in real life. If you’re a single filer who earns $60,000 a year after you take all the necessary exemptions, adjustments, and deductions, the first $11,600 in earnings will be taxed 10%. From $11,601 to $47,150 you will be taxed 12%. On the rest, you’ll be taxed 22%. You are in the 22% tax bracket, though your effective tax rate will be much lower.
If you are married filing jointly, the first $23,200 will be taxed 10%. Any amount over $23,200 to $94,300 is taxed at 12%.
Earlier, I mentioned that there were exemptions, adjustments, and deductions. The income you earned from your job is considered ordinary or gross income, but you are taxed on your adjusted gross income, which is your income minus those exemptions, adjustments, and deductions.
When you know your tax bracket, you can easily calculate how valuable different tax deductions are for you. If you are in the 22% tax bracket, a $1,000 deduction will reduce your tax liability by $220.
Not all of your income is taxed based on these brackets. If you have long-term capital gains and qualified dividends, you will be taxed at 0%, 15%, or 20% depending on your income. If you have a short-term gain, it will be taxed as ordinary income using your marginal tax rate.
So My Tax Brackets Are Different From Last Year?
Each new tax year the income thresholds for each tax bracket are updated. The seven tax bracket percentages have not been changed since tax year 2018.
The current tax brackets are: 10%, 12%, 22%, 24%, 32%, 35% and 37%.
The income thresholds for these brackets kick are below in the charts:
2023 Rates
| Rates | Threshold for Single | Threshold for MFJ |
| 10% | $0 – $11,000 | $0 – $22,000 |
| 12% | $11,001 – $44,725 | $22,001 – $89,450 |
| 22% | $44,726 – $95,375 | $89,451 – $190,750 |
| 24% | $95,376 – $182,100 | $190,751 – $364,200 |
| 32% | $182,101 – $231,250 | $364,201 – $462,500 |
| 35% | $231,251 – $578,125 | $462,501 – $693,750 |
| 37% | $578,126 and over | $693,751 and over |
2024 Rates
| Rates | Threshold for Single | Threshold for MFJ |
| 10% | $0 to $11,600 | $0 to $23,200 |
| 12% | $11,601 to $47,150 | $23,201 to $94,300 |
| 22% | $47,151 to $100,525 | $94,301 to $201,050 |
| 24% | $100,526 to $191,950 | $201,051 to $383,900 |
| 32% | $191,951 to $243,725 | $383,901 to $487,450 |
| 35% | $243,726 to $609,350 | $487,451 to $731,200 |
| 37% | $609,351 and over | $731,201 and over |
Understanding how tax brackets work, as well as which bracket you are in, can help you make better informed financial decisions, but you don’t need to know how to calculate tax brackets when you use TurboTax. TurboTax will automatically figure out your tax bracket based on your information, and give you the tax deductions and credits you deserve based on your entries.
No matter what moves you made last year, TurboTax will make them count on your taxes. Whether you want to do your taxes yourself or have a TurboTax expert file for you, we’ll make sure you get every dollar you deserve and your biggest possible refund – guaranteed.
Helpful Explanation, Thanks.
Joe, thank you this was throughly written.
I used to think I needed to make sure my earnings stayed under a certain number to keep from being in a higher taxed bracket. But now I know that only the earnings above the higher bracket are taxed at the higher number. My earnings below that are all taxed at the lower bracket percentage rate😏
You did a great job with providing coherent information using definitive terms and giving examples for our complex tax system. The rich will keep getting richer and the poor will always be here. Though you are the recipient of unkind words, we know you didn’t make the tax laws, and even then, you realize that some people will never be satisfied. Well done! Thank you.
I agree. THANK YOU💐💐
Thanks for the information given I understand it now.
That really helped me understand that what tax brackets I’m into. Thanks a bunch for the latest update.
Thank you! After a lifetime of taxes I understand what a tax bracket is!
“progressive”
Thank you for elaborating on Tax brackets. Appreciate your insight and explanation.
Thank you for clarifying for me.
This is the first time I have understood the tax brackets. Thanks
you can thank Wong all you want but the information is bull. I’ve never met a wealthy person or someone that earns more income than I and actually pays more taxes than me. sure, I’m sure there are some stupid wealthy people out there, but it’s easier to pay less taxes making more than it is to pay more making less. if you don’t understand what I’m saying, then carry on, and continue being a slave.😄
A lot of wealthy people you know sharing their tax liabilities with you?
Glad you don’t run my finances.
There really is no point on taxing money we make then taxing money we spend and taxing money to get us to work. Seems like all the government wants is our money for there gain. Piss on the poor. Feed the rich.
Thanks for the clear explanation.
Good information. Also, reveals hidden tax increase due to inflation. The approximate 8% rise in prices since 2018 and hopefully income, push many into a higher bracket.
And I thought that I knew what tax brackets were. I knew it had to do with income but thank you for the explanation.
Single Filer.. so same tax bracket.. cool
These brackets should be cut in half up to 100k! This is ridiculous! This country bends you over 24/7
Great no assistance for the middle class as always. My bracket will not change.
I don’t even understand why someone who makes 10k gets taxes at 10%
Should be everyone gets taxed at 10% regardless of income.
Thanks for the explanation on this tax bracket concept. It is all clear now to me.
Not a lot of difference, in my opinion… so pretty much status quo…. thanks to our government for the inflation so we could save $5 on our taxes
Thank you for the information. I appreciate you.
Good info. I don’t understand how it jumps from 12% to 22% abruptly. Should be more like 12 to 18%.
Thank you for explaining it so clearly.
This is great information. I have used Turbo Tax for as far back as I can remember and it does all the work (thinking) for me so thank you for letting me know about these brackets. I never knew the breakdown before.
Good Job. It’s always helpful to have that situation explained.
is there a bracket for filing head of household
That would fall under the “Sinlge FiIers”
MFJ = married filing jointly
Thanks I really understood but the way you worded and broke everything down .I feel more informed anyway .
Are the tax tables above for adjusted gross income or taxable income?