2022/2023 Federal Income Tax Brackets and Standard Deductions

It’s the most wonderful time of the year—for tax accountants.

Americans have until April 18th, 2023 to file their 2022 federal income taxes. It’s also time to start thinking about your 2023 income taxes.

You might say it’s too early to think about 2023 tax brackets and deductions but understanding your tax bracket can help you make all sorts of helpful financial decisions, especially if you’re on the line between two tax brackets.

Related: Cash App Taxes Review

The 2022 Standard Deduction

The Tax Cuts and Jobs Act of 2017 more than doubled the amount for standard deductions, meaning more taxpayers than ever have stopped itemizing and are claiming the standard deduction.

But it’s still good to keep track of your tax-deductible expenses in 2022 because if they happen to be higher than your standard deduction you could save some money on your taxes next year.

Remember, even if you take the standard deduction, there are still certain deductions and credits you can claim without itemizing.

How Tax Brackets Work

Currently, there are seven federal income tax brackets in the U.S ranging from 10% to 37%. These rates apply to taxable income, which is your gross income after you’ve subtracted the standard deduction or allowable itemized deductions.

2022 IRS Federal Tax Brackets (for taxes filed in 2023)

For income earned in 2021, the following are the brackets at which each segment of your applicable income are taxed:

2023 IRS Federal Tax Brackets (for taxes filed in 2024)

For income earned in 2022, the income tax brackets are:

Tax brackets divide your income into levels that are taxed at different rates. Being in one tax bracket doesn’t mean all of your income is taxed at that rate, every bracket is taxed at its own rate.

For example, let’s suppose you’re a single filer who made $21,000 in 2022. After taking the standard deduction of $12,950, your taxable income is $8,050. That puts you in just the 10% tax bracket.

Related: Tax Season Survival Tips

Calculating Your 2022 Federal Income Tax

To calculate the amount of income tax you owe in each bracket simply multiply your income in that bracket by the applicable rate and you’ll get the amount owed. For the previous example, if your taxable income is $8,050, multiply it by .1 and you’ll see you owe $805 in federal income tax.

As you move into a higher income bracket you add a few more calculations. Say, you’re married, filing jointly with a gross income of $90,000 in 2022. After subtracting the standard deduction of $25,900 your taxable income for 2022 is $64,100. That puts you in the 12% tax bracket.

To calculate your tax bill you’ll pay 10% on the first $20,500 of your income and 12% on the remaining $43,600.

.1 x 20,500= 2,050

.12 x 43,600= 5,232

This makes your total federal income tax bill $7,282. Your standard deduction is determined by your filing status and stays the same regardless of your income. As your income goes up, your tax bracket rates increase accordingly.

These are simple calculations and don’t take into account all the other deductions and credits available to taxpayers.

FAQs

If I move to a higher tax bracket, is all of my income taxed at a higher rate?

No, if you move to a higher tax bracket, only the income in that bracket gets taxed at the higher rate. Moving to a higher tax bracket can’t hurt you by reducing your post-tax income.

For example, for 2022 single filers, the 10% tax bracket applies to all income between $0 and $10,275. Income between $10,276 and $41,775 is taxed at 12%. If your taxable income is $20,000 you only pay 10% tax on your income up to $10,275 and then pay 12% on the amount over $10,275. In this scenario, your total tax bill would be:

($10,275 * 10%) + (($20,000 - $10,275) * 12%) = $2,194

What is a head of household?

Head of household is a special tax filing status. According to the IRS, to qualify as a head of household, you must not be married or not live with your spouse for the majority of the year. You also have to be responsible for at least half of the cost of supporting a qualifying person, typically a child or parent.

How can I get into a lower tax bracket?

You can get into a lower tax bracket by reducing your taxable income. While making less money is one way to do this, it isn’t a strategy most people want to pursue. Other ways to reduce your taxable income include taking deductions or contributing to retirement accounts that let you deduct contributions from your income.

Did the tax brackets change?

Tax law changes frequently. Each year, the income bands for each tax bracket get adjusted for inflation, meaning they usually move up. For example, in 2021, single filers paid 10% on income up to $9,950 but in 2022 paid 10% on incomes up to $10,275.

On occasion, the government changes the number of tax brackets or the tax rate for each bracket. For example, in 2017, the highest tax bracket was taxed at 39.7% but in 2018 the rate dropped to 37%. Of course, they also increase it as well.

What's the difference between a free and paid taxes software?

There are many different programs that can help you file your taxes, some of which are free and some of which cost money.

In general, paid services can be more likely to have a better user experience and be easier to use. They’re also more likely to offer better customer support as they have more money to pay for programmers and support staff.

If you need a lot of help when it comes to doing your taxes, a paid program may be a good choice. Those who are more comfortable with filing taxes may be able to get by with a free program, saving them money.

Next Steps

An estimated 90% of tax filers will take their standard deduction. If you’re planning on having a significant number of deductible expenses this year, keep track of them in case they exceed your standard deduction. You can still make tax-deductible contributions to your 401(k). Also, if you didn’t max out your IRA for the previous tax year, you have until April 18th this year to add more.

If you are looking for software to help you file your taxes, check out our list of the best tax software.