It is crucial to understand your income tax bracket and federal tax rate regardless of your income level as they both play a major role in determining your final tax bill. There are seven federal income tax rates in 2023 and 2024: 10%, 12%, 22%, 24%, 32%, 35% and 37%.
The IRS has announced its 2024 inflation adjustments. And while the U.S. income tax rates will remain the same until 2025 due to the Tax Cuts and Jobs Act of 2017, the US tax brackets- income thresholds that inform the tax brackets will change.
These adjustments are important to prevent taxpayers from ending up in a higher bracket as their cost of living and income rises, also known as ‘bracket creep.’ The tax bracket adjustment can also lower federal tax rates for individuals whose compensation has not kept up with inflation.
What are Tax Brackets?
Income tax brackets were created by the IRS to implement the ‘progressive’ tax system, which taxes higher levels of income at progressively higher rates. This bracket helps in determining how much money you need to pay in taxes annually.
The amount you pay in taxes is directly linked to your income. If your income increases, the taxes you pay will also increase simultaneously.
How Do Tax Brackets Work?
Figuring out your final tax bill is complex and isn’t as easy as comparing your salary to the brackets shown above. For example- if you are single and your taxable income is $75,000. Your marginal tax rate is 22%, but, some of your income will be taxed in lower brackets.
- The first $11,600 is taxed at 10%: $1,160
- The next $35,550 ($47,150 minus $11,600) is taxed at 12%: $4,266
- The last $27,850 ($75,000 minus $47,150) is taxed at 22%: $6,127
The final tax bill for your $75,000 income will be the sum of $1160+$4266+$6127=$11533
What is a Marginal Tax Rate?
The marginal tax rate is the tax rate paid on your top dollar of taxable income. This bracket is your highest tax rate, applying to the top portion of your income.
For example, if you're a single filer in 2023 with $35,000 of taxable income, you would be in the 12% tax bracket. If your taxable income went up by $1, you would pay 12% on that extra dollar, too.
If your taxable income is $45,000, most of it would fall within the 12% bracket, but the last few hundred dollars will land in the 22% income tax bracket, making your marginal tax rate 22%.
Tax Brackets and Federal Income Tax Rates for 2023
(Taxes due April 15, 2024)
| Tax Rate | Single | Married, filing jointly | Married, filing separately | Head of Household |
| 10% | $0 to $11,000 | $0 to $22,000 | $0 to $11,000 | $0 to $15,700 |
| 12% | $11,001 to $44,725 | $22,001 to $89,450 | $11,001 to $44,725 | $15,701 to $59,850 |
| 22% | $44,726 to $95,375 | $89,451 to $190,750 | $44,726 to $95,375 | $59,851 to $95,350 |
| 24% | $95,376 to $182,100 | $190,751 to $364,200 | $95,376 to $182,100 | $95,351 to $182,100 |
| 32% | $182,101 to $231,250 | $364,201 to $462,500 | $182,101 to $231,250 | $182,101 to $231,250 |
| 35% | $231,251 to $578,125 | $462,501 to $693,750 | $231,251 to $346,875 | $231,251 to $578,100 |
| 37% | $578,126 and more | $693,751 and more | $346,876 and more | $578,101 and more |
Source: IRS
With a tax extension, federal income tax returns 2023 are due by April 15, 2024, or October 15, 2024. There are seven tax rates: 10%, 12%, 22%, 24%, 32%, 35% and 37%.
Tax Brackets and Income Tax Rates for 2024
(Taxes due April 15, 2024)
The 2024 tax year, and the return due in 2025, will continue with these seven federal tax brackets: 10%, 12%, 22%, 24%, 32%, 35% and 37%. Your filing status and taxable income, including wages, will determine the bracket you’re in.
2024 Income Tax Brackets(Single Filer)
| Taxable Income | Tax Due |
| Not over $11,600 | 10% of taxable income |
| Over $11,600 but not over $47,150 | $1,160 plus 12% of the excess over $11,600 |
| Over $47,150 but not over $100,525 | $5,426 plus 22% of the excess over $47,150 |
| Over $100,525 but not over $191,950 | $17,168.50 plus 24% of the excess over $100,525 |
| Over $191,950 but not over $243,725 | $39,110.50 plus 32% of the excess over $191,150 |
| Over $243,725 but not over $609,350 | $55,678.50 plus 35% of the excess over $243,725 |
| Over $609,350 | $183,647.25 plus 37% of the excess over $609,350 |
2024 Income Tax Brackets(Married, Filing Separately)
| Taxable Income | Tax Due |
| Not over $11,600 | 10% of taxable income |
| Over $11,600 but not over $47,150 | $1,160 plus 12% of the excess over $11,600 |
| Over $47,150 but not over $100,525 | $5,426 plus 22% of the excess over $47,150 |
| Over $100,525 but not over $191,950 | $17,168.50 plus 24% of the excess over $100,525 |
| Over $191,950 but not over $243,725 | $39,110.50 plus 32% of the excess over $191,150 |
| Over $243,725 but not over $365,600 | $55,678.50 plus 35% of the excess over $243,725 |
| Over $365,600 | $98,334.75 plus 37% of the excess over $365,600 |
2024 Income Tax Brackets(Head of Household)
| Taxable Income | Tax Due |
| Not over $16,550 | 10% of taxable income |
| Over $16,550 but not over $63,100 | $1,655 plus 12% of the excess over $16,550 |
| Over $63,100 but not over $100,500 | $7,241 plus 22% of the excess over $63,100 |
| Over $100,500 but not over $191,950 | $15,469 plus 24% of the excess over $100,500 |
| Over $191,950 but not over $243,700 | $37,417 plus 32% of the excess over $191,150 |
| Over $243,700 but not over $609,350 | $53,977 plus 35% of the excess over $243,700 |
| Over $609,350 | $181,954.50 plus 37% of the excess over $609,350 |
2024 Income Tax Bracket(Married, Filing Jointly)
| Taxable Income | Tax Due |
| Not over $23,200 | 10% of taxable income |
| Over $23,200 but not over $94,300 | $2,320 plus 12% of the excess over $23,200 |
| Over $94,300 but not over $201,050 | $10,852 plus 22% of the excess over $94,300 |
| Over $201,050 but not over $383,900 | $34,337 plus 24% of the excess over $201,050 |
| Over $383,900 but not over $487,450 | $78,221 plus 32% of the excess over $383,900 |
| Over $487,450 but not over $731,200 | $111,357 plus 35% of the excess over $487,450 |
| Over $731,200 | $196,669.50 plus 37% of the excess over $731,200 |
Read Also:- Capital Gains Tax: What It Is, How It Works, and Current Rates
Final Words
The IRS adjusts the tax brackets and tax rates every year to keep up with the current tax law. In 2013, the top tax rate for higher-income earners was 39.6%, however, today it is only 37%
The rates and even the federal income tax brackets have been adjusted in the past. Income tax brackets and rates continue to evolve. It was first introduced in 1913 and has been as high as 94%. Today, the top tax rate is 37% and took effect in 2018.
