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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.
| Single | $12,950 | $13,850 |
| Married, filing jointly | $25,900 | $27,700 |
| Married, filing separately | $12,950 | $13,850 |
| Head of household | $18,800 | $20,800 |
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:
| 10% | 0 to $10,275 | 0 to $20,550 | 0 to $10,275 | 0 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 $89,950 |
| 24% | $89,076 to $170,050 | $178,151 to $340,100 | $89,076 to $170,050 | $89,951 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 $647,850 | $215,951 to $323,925 | $215,951 to $539,900 |
| 37% | Over $539,900 | Over $647,850 | Over $323,925 | Over $539,900 |
2023 IRS Federal Tax Brackets (for taxes filed in 2024)
For income earned in 2022, the income tax brackets are:
| 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 $346,200 | $95,376 to $182,100 | $95,351 to $182,100 |
| 32% | $182,101 to $231,250 | $346,201 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% | Over $578,125 | Over $693,750 | $346,875 | Over $578,100 |
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.
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
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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.
