What tax bracket are you in? How much does the IRS take? Here’s how to figure it out
Want to know how much you’re being taxed?
The marginal federal tax rates range between 10% and 37%, depending on your income.
But it’s a progressive system, according to Investopedia. That means that you’re not paying the top rate on all of your income. Instead, it’s divided into chunks. Each piece is taxed. Your highest tax rate is your marginal rate, according to NerdWallet.
These are the federal marginal tax rates for tax year 2023 (the tax returns you’re filing now):
37% for incomes over $578,125 or $693,750 for married couples filing jointly.
35% for incomes over $231,250 or $462,500 for married couples filing jointly.
32% for incomes over $182,100 or $364,200 for married couples filing jointly.
24% for incomes over $95,375 or $190,750 for married couples filing jointly.
22% for incomes over $44,725 or $89,450 for married couples filing jointly.
12% for incomes over $11,000 or $22,000 for married couples filing jointly.
10% for incomes of $11,000 or less — or $22,000 for married couples filing jointly.
If you earned $60,000 in taxable income, you’ll pay 10% on the first $11,000, 12% on the chunk between $11,001 and $44,725, and 22% on the rest.
You’d pay $1,100 on the first chunk, $4,047 on the second, and $3,360 on the third, for $8,508 total. That’s about 14% — or what’s called your effective tax rate.
In 2025, when you’re filing 2024 tax returns, these will be your marginal tax rates:
37% for incomes over $609,350 or $731,200 for married couples filing jointly.
35% for incomes over $243,725 or $487,450 for married couples filing jointly.
32% for incomes over $191,950 or $383,900 for married couples filing jointly.
24% for incomes over $100,525 or $201,050 for married couples filing jointly.
22% for incomes over $47,150 or $94,300 for married couples filing jointly.
12% for incomes over $11,600 or $23,200 for married couples filing jointly.
10% for incomes of $11,600 or less — $23,200 for married couples filing jointly.
Income tax for states varies; some states don’t tax income.
How can you lower your taxable income?
When you lower your taxable income through credits or deductions, you can reduce your tax bill.
While tax credits don’t affect your tax rate, they can reduce your overall bill dollar-for-dollar, according to NerdWallet. If you have a $1,000 tax credit, your bill will be lower by that amount.
Tax deductions lower how much of your income is taxable. For example, if you have a $1,000 deduction and you’re in the 22% bracket, you’ll save $220.
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This story was originally published January 29, 2024 at 7:00 AM with the headline "What tax bracket are you in? How much does the IRS take? Here’s how to figure it out."
