What you need to know before filing your taxes this year
- Feb 13, 2023
- 9 min read
What we'll cover
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2022 and 2023 tax bracket tables
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How tax brackets and the progressive tax system work
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Ways to get into a lower tax bracket
Apart from accountants and finance aficionados, taxes are not a to-do many people look forward to — but filing is an annual necessity and Tax Day 2023 is Tuesday, April 18th.
By knowing what you need beforehand, you can knock this off your to-do list in an afternoon (or faster).
This year, a few factors will make filing taxes in 2023 (for tax year 2022) a little different from previous seasons and could impact how much you might owe or how big of a refund you may receive. Of course, every individual situation may vary, and you may want to consult a tax professional for any questions on how to file or what you should include.
Here’s a few updates to get you started:
By knowing what you need beforehand, you can knock this off your to-do list in an afternoon (or faster).
What is a tax bracket?
A tax bracket is a range of incomes subject to a certain tax rate, which is determined by your filing status and taxable income for the year. The Internal Revenue Service (IRS) makes adjustments every year, so it’s possible your tax bracket will change between this tax year (which is based on your 2022 income) and the 2023 tax year (which will be filed in 2024). We’re going to cover the tax brackets for 2022 and the changes coming in 2023. Your specific situation may not be straightforward, but a tax professional can help you determine your tax bracket.
2022 tax rates and brackets
Here’s a look at how the federal tax brackets stack up this tax filing season, based on 2022 income and filing status:
Single filers
Tax rate | Federal income tax bracket | Tax owed |
---|---|---|
10% | $0 to $10,275 | 10% of taxable income |
12% | $10,276 to $41,775 | $1,027.50 plus 12% of the amount over $10,275 |
22% | $41,776 to $89,075 | $4,807 plus 22% of the amount over $41,175 |
24% | $89,076 to $170,050 | $15,213 plus 24% of the amount over $89,075 |
32% | $170,051 to $215,950 | $34,647.50 plus 32% of the amount over $170,050 |
35% | $215,951 to $539,900 | $49,335.50 plus 35% of the amount over $215,950 |
37% | $539,901 or more | $162,718 plus 37% of the amount over $539,900 |
Source: IRS
Married couples filing jointly
Tax rate | Federal income tax bracket | Tax owed |
---|---|---|
10% | $0 to $20,550 |
10% of taxable income |
12% | $20,551 to $83,550 |
$2,055 plus 12% of the amount over $20,550 |
22% | $83,551 to $178,150 |
$9,615 plus 22% of the amount over $83,550 |
24% | $178,151 to $340,100 |
$30,427 plus 24% of the amount over $178,150 |
32% | $340,101 to $431,900 |
$69,295 plus 32% of the amount over $340,100 |
35% | $431,901 to $647,850 |
$98,671 plus 35% of the amount over $431,900 |
37% | $647,851 or more |
$174,253.50 plus 37% of the amount over $647,850 |
Source: IRS
Married couples filing separately
Tax rate | Federal income tax bracket | Tax owed |
---|---|---|
10% | $0 to $10,275 | 10% of taxable income |
12% | $10,276 to $41,775 | $1,027.50 plus 12% of the amount over $10,275 |
22% | $41,776 to $89,075 | $4,807 plus 22% of the amount over $41,775 |
24% | $89,076 to $170,050 | $15,213.50 plus 24% of the amount over $89,075 |
32% | $170,051 to $215,950 | $34,647.50 plus 32% of the amount over $170,050 |
35% | $215,951 to $323,925 | $49,335.50 plus 35% of the amount over $215,950 |
37% | $323,926 or more | $86,127 plus 37% of the amount over $323,925 |
Source: IRS
Head of household
Tax rate | Federal income tax bracket | Tax owed |
---|---|---|
10% | $0 to $14,650 |
10% of taxable income |
12% | $14,651 to $55,900 |
$1,465 plus 12% of the amount over $14,650 |
22% | $55,901 to $89,050 |
$6,415 plus 22% of the amount over $55,900 |
24% | $89,051 to $170,050 |
$13,708 plus 24% of the amount over $89,050 |
32% | $170,051 to $215,950 |
$33,148 plus 32% of the amount over $170,050 |
35% | $215,951 to $539,900 |
$47,836 plus 35% of the amount over $215,950 |
37% | $539,901 or more |
$162,218.50 plus 37% of the amount over $539,900 |
Source: IRS
2023 tax rates and brackets
The IRS has announced its annual inflation adjustments for the tax year 2023 (which will be filed in 2024). Below are the updated tax rates to keep in mind for next year.
Single filers
Tax rate | Federal income tax bracket | Tax owed |
---|---|---|
10% | $0 to $11,000 | 10% of taxable income |
12% | $11,001 to $44,725 | $1,100 plus 12% of the amount over $11,000 |
22% | $44,726 to $95,375 | $5,147 plus 22% of the amount over $44,725 |
24% | $95,376 to $182,100 | $16,290 plus 24% of the amount over $95,375 |
32% | $182,101 to $231,250 | $37,104 plus 32% of the amount over $182,100 |
35% | $231,251 to $578,125 | $52,832 plus 35% of the amount over $231,250 |
37% | $578,126 or more | $174,238.25 plus 37% of the amount over $578,125 |
Source: IRS
Married couples filing jointly
Tax rate | Federal income tax bracket | Tax owed |
---|---|---|
10% | $0 to $22,000 |
10% of taxable income |
12% | $22,001 to $89,450 |
$2,200 plus 12% of the amount over $22,000 |
22% | $89,451 to $190,750 |
$10,294 plus 22% of the amount over $89,450 |
24% | $190,751 to $364,200 |
$32,580 plus 24% of the amount over $190,750 |
32% | $364,201 to $462,500 |
$74,208 plus 32% of the amount over $364,200 |
35% | $462,501 to $693,750 |
$150,664 plus 35% of the amount over $462,500 |
37% | $693,751 or more |
$186,601.50 plus 37% of the amount over $693,750 |
Source: IRS
Married couples filing separately
Tax rate | Federal income tax bracket | Tax owed |
---|---|---|
10% | $0 to $11,000 | 10% of taxable income |
12% | $11,001 to $44,725 | $1,100 plus 12% of the amount over $11,000 |
22% | $44,726 to $95,375 | $5,147 plus 22% of the amount over $44,725 |
24% | $95,376 to $182,100 | $16,290 plus 24% of the amount over $95,375 |
32% | $182,101 to $231,250 | $37,104 plus 32% of the amount over $182,100 |
35% | $231,251 to $346,875 | $52,832 plus 35% of the amount over $231,250 |
37% | $346,876 or more | $93,000.75 plus 37% of the amount over $346,875 |
Source: IRS
Head of household
Tax rate | Federal income tax bracket | Tax owed |
---|---|---|
10% | $0 to $15,700 |
10% of taxable income |
12% | $15,701 to $59,850 |
$1,570 plus 12% of the amount over $15,700 |
22% | $59,851 to $95,350 |
$6,868 plus 22% of the amount over $59,850 |
24% | $95,351 to $182,100 |
$14,678 plus 24% of the amount over $95,350 |
32% | $182,101 to $231,250 |
$35,498 plus 32% of the amount over $182,100 |
35% | $231,251 to $578,100 |
$51,226 plus 35% of the amount over $231,250 |
37% | $578,101 or more |
$172,623.50 plus 37% of the amount over $578,100 |
Source: IRS
How federal tax brackets work
The United States uses a progressive tax system, which means each portion of your income is taxed at a different rate. Tax brackets determine the rate at which each portion is taxed based on your filing status.
While this system effectively results in people with higher incomes paying more in taxes, all taxpayers pay the same rate for the same level of taxable income. For example, whether you made $10,000 or $100,000 of taxable income in 2022, the first $10,000 will be taxed at 10% (if you’re a single filer).
Let’s consider another example. Say you are a single filer and you made $60,000 of taxable income in 2022. The first $10,275 will be taxed at the 10% rate, then the amount between $10,275 and $41,775 is taxed at 12%, and the remaining $18,225 is taxed at the 22% rate, as it falls in that bracket. The total tax bill is $8,817, which is about 14.7% of your taxable income.
So, in the example above, the total taxable income of $60,000 lands in the 22% tax bracket — but you don’t actually pay 22% of your total income in taxes. The amount paid, in this case 14.7%, is called your effective tax rate.
What is a marginal tax rate?
Your marginal tax rate is the tax rate paid on the last dollar of your taxable income. It’s basically the tax rate of the highest tax bracket you’re in. Based on the $60,000 taxable income example provided in the previous section, that person’s marginal tax rate is 22%.
Because of the progressive tax system, your marginal tax rate will likely be greater than your effective tax rate.
How to get into a lower tax bracket
Being in a lower tax bracket means owing less money in taxes. When prepping your tax return, it pays to know the difference between tax deductions and credits, and which you’re eligible to claim. Working with a tax professional is the best way to find out what credits and deductions you qualify for.
Tax credits
Tax credits directly lower your tax bill. For example, if you owe $1,000 in taxes and qualify for a $1,000 credit, the credit can zero out your tax liability. Some, like the Child Tax Credit , are refundable, meaning if the credit amount exceeds what you owe in taxes, you receive the difference in your refund (conversely, if your income is higher, you may need to repay some or all of the money you received).
Tax deductions
Tax deductions reduce the amount of income that’s subject to tax. They can be above-the-line (used to calculate your adjusted gross income (AGI) or below-the-line (deducted after AGI is calculated). Above-the-line deductions include things like Individual Retirement Account (IRA) contributions and student loan interest. Below-the-line deductions are itemized deductions you claim on the Schedule A tax form, which a tax professional can help prepare.
Standard deductions vs. itemized deductions
The standard deduction is a flat dollar amount you deduct based on your filing status. Your tax advisor can help you decide if a standard or itemized deduction is the right choice for your specific situation.
Standard deductions
Filing status | 2022 Tax year |
---|---|
Single | $12,950 |
Married, filing jointly | $25,900 |
Married, filing separately | $12,950 |
Head of household | $19,400 |
Source: IRS
New to filing taxes in 2023
If it’s your first time filing income taxes , keep the following in mind:
The basics
Failing to file or not paying taxes owed can trigger a tax penalty or in extreme cases, the IRS could place liens against your property or file charges, so make sure to prioritize filing on time.
The IRS offers an online tool you can use to determine if filing a federal tax return is necessary for you.
Speaking of filing status, you can choose from: Single, head of household, married filing separately, married filing jointly or qualifying widow/widower with a dependent child. If you’re not sure, a tax professional can help you determine the proper filing status for you.
Be sure to gather all necessary tax forms and maintain documentation of any income, government benefits (such as unemployment benefits), receipts on major purchases, business expenses, distributions and any gains or losses from your investments.
Reporting investment income
Money made from dividends or investment profits is subject to tax. But tax implications vary depending on how long you’ve owned the asset before selling. A tax profession can help you explore certain strategies, like tax-loss harvesting, that can help you lower your investment tax bill.
Steps to file taxes
You can collect your paperwork (W-2s, receipts for deductible expenses, etc.) and take it to a tax professional, who can get your tax return in order and file for you, in exchange for a fee.
Or, if you feel comfortable doing taxes on your own, you can prepare both your federal and state tax returns using an online tax filing program or by hand using paper and pencil. If you qualify, the IRS Free File program lets you file taxes for free.
While the DIY option is cheaper than hiring a tax pro, it may be more time consuming if you’re not well-versed in filing taxes.
Tax refunds
Once completed, you’ll see whether you owe a tax bill or you’re due a refund. If you’re getting a refund, direct deposit is the fastest way to get the money. The IRS aims to send refunds within 21 days of a tax return being approved.
What to do if you owe money
If you owe taxes, pay those by the tax filing deadline to avoid penalties and interest. If you owe a large sum of money to the IRS, you can set up an Installment Agreement, which doesn’t prevent penalties and interest from accruing but it can give you time to pay the IRS what you owe without fear of a lien or other consequences.
If you owe taxes, pay those by the tax filing deadline to avoid penalties and interest. If you owe a large sum of money to the IRS, you can set up an Installment Agreement, which doesn’t prevent penalties and interest from accruing but it can give you time to pay the IRS what you owe without fear of a lien or other consequences.
Filing taxes doesn't have to be complicated
Getting your tax return together shouldn’t be a hassle. Whether you file on your own or work with a tax professional, staying organized throughout the year is a great way to ensure that the season doesn’t sneak up on you. Happy filing!
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