Now’s a great time to start thinking about your next federal income tax return, since you have plenty of time to both develop and execute a plan to lower your 2023 tax bill. Your return for the 2023 tax year isn’t due until April 15, 2024 (April 17 for residents of Maine and Massachusetts), but that day will be here before you know it. And if you want to minimize the amount you owe then, you need to start thinking about next year’s tax return now—beginning with your expected federal tax bracket.
Which of the seven federal income tax brackets you’re in depends on your taxable income and filing status. Each tax bracket is also tied to one of the seven different federal income tax rates. However, if it looks like you might be pushed into a higher tax bracket on your 2023 return, you might be able to prevent—that with some year-end tax planning.
Read on to see how much you might owe the Internal Revenue Service (IRS) for the 2023 tax year. I’ll lay out the seven tax brackets for 2023 in easy-to-understand tables, provide mathematical examples of how those brackets work, and explain how to get a clearer understanding of what you’ll owe with effective tax rates. I’ll also provide the tax brackets for 2022 for comparison’s sake. Finally, I’ll provide some tips that might help you lower your tax rate.
Related: What’s Your Standard Deduction for 2023?
Federal Income Tax Rates for 2023
A progressive tax system administered by the IRS is used to generate revenue from U.S. taxpayers. Basically, that means you pay income tax at a higher rate as your income increases. This is different from a flat-rate tax system, which a growing number of states use, which applies a single tax rate to all taxpayers, regardless of their income.
While a flat-rate system is easier to understand and apply, many people believe a progressive tax system more fairly imposes income taxes across different income levels.
The U.S. tax code currently utilizes seven tax rates, but they have recently changed and are set to change again in a few years. Tax reform legislation passed in 2018 lowered the federal income tax rates associated with five of the seven tax brackets. Before the 2018 tax year, the federal tax rates were 10%, 15%, 25%, 28%, 33%, 35%, and 39.6%.
Beginning with the 2018 tax year, the federal income tax rates are 10%, 12%, 22%, 24%, 32%, 35%, and 37%. However, these lower tax rates are scheduled to expire after 2025, at which time the pre-2018 tax rates will apply once again (although the scheduled reversion could be adjusted or repealed depending on how the political landscape looks after the 2024 elections).
Related: States That Tax Social Security Benefits
Federal Income Tax Brackets for 2023
As noted above, your federal income tax return for the 2023 tax year will be due on April 15, 2024, for most people. The federal income tax brackets that will apply to your 2023 tax return, based on the filing status you use—single, married filing separately, married filing jointly, surviving spouse, or head of household—are shown in the tables below.
The tables provide the tax rate, taxable income range, and tax calculation instructions for each tax bracket. So, once you know your 2023 filing status and taxable income, you can find the tax bracket—and highest tax rate—that will apply to you.
2023 Tax Brackets for Single Filers
| Tax Rate | Taxable Income Range | Tax Calculation |
|---|---|---|
| 10% | $0 to $11,000 | 10% of taxable income |
| 12% | $11,001 to $44,725 | $1,100 plus 12% of amount over $11,000 |
| 22% | $44,726 to $95,375 | $5,147 plus 22% of amount over $44,725 |
| 24% | $95,376 to $182,100 | $16,290 plus 24% of amount over $95,375 |
| 32% | $182,101 to $231,250 | $37,104 plus 32% of amount over $182,100 |
| 35% | $231,251 to $578,125 | $52,832 plus 35% of amount over $231,250 |
| 37% | $578,126 or more | $174,238.25 plus 37% of amount over $578,125 |
2023 Tax Brackets for Married Couples Filing Jointly and Surviving Spouses
| Tax Rate | Taxable Income Range | Tax Calculation |
|---|---|---|
| 10% | $0 to $22,000 | 10% of taxable income |
| 12% | $22,001 to $89,450 | $2,200 plus 12% of amount over $22,000 |
| 22% | $89,451 to $190,750 | $10,294 plus 22% of amount over $89,450 |
| 24% | $190,751 to $364,200 | $32,580 plus 24% of amount over $190,750 |
| 32% | $364,201 to $462,500 | $74,208 plus 32% of amount over $364,200 |
| 35% | $462,501 to $693,750 | $105,664 plus 35% of amount over $462,500 |
| 37% | $693,751 or more | $186,601.50 plus 37% of amount over $693,750 |
2023 Tax Brackets for Married Couples Filing Separately
| Tax Rate | Taxable Income Range | Tax Calculation |
|---|---|---|
| 10% | $0 to $11,000 | 10% of taxable income |
| 12% | $11,001 to $44,725 | $1,100 plus 12% of amount over $11,000 |
| 22% | $44,726 to $95,375 | $5,147 plus 22% of amount over $44,725 |
| 24% | $95,376 to $182,100 | $16,290 plus 24% of amount over $95,375 |
| 32% | $182,101 to $231,250 | $37,104 plus 32% of amount over $182,100 |
| 35% | $231,251 to $346,875 | $52,832 plus 35% of amount over $231,250 |
| 37% | $346,876 or more | $93,300.75 plus 37% of amount over $346,875 |
2023 Tax Brackets for Head-of-Household Filers
| Tax Rate | Taxable Income Range | Tax Calculation |
|---|---|---|
| 10% | $0 to $15,700 | 10% of taxable income |
| 12% | $15,701 to $59,850 | $1,570 plus 12% of amount over $15,700 |
| 22% | $59,851 to $95,350 | $6,868 plus 22% of amount over $59,850 |
| 24% | $95,351 to $182,100 | $14,678 plus 24% of amount over $95,350 |
| 32% | $182,101 to $231,250 | $35,498 plus 32% of amount over $182,100 |
| 35% | $231,251 to $578,100 | $51,226 plus 35% of amount over $231,250 |
| 37% | $578,101 or more | $172,623.50 plus 37% of amount over $578,100 |
Related: Education Tax Credits and Deductions for 2023
How Do the Tax Brackets Work?
Many people think that all their income is taxed at the rate tied to their tax bracket. However, that’s not how the federal income tax brackets work. Instead, unless you’re in the 10% bracket, at least some of your income will be taxed at a lower tax rate than the rate connected to your tax bracket.
The U.S. tax code uses marginal tax rates, which basically means that only the income that falls within the taxable income range for each tax bracket is taxed at that bracket’s corresponding tax rate. Income below your marginal tax bracket is taxed at lower rates according to the income ranges for any lower tax bracket. As a result, marginal tax rates reduce income taxes for almost everyone.
Example
Nicholas is a single filer and has $60,000 of taxable income for the 2023 tax year. That puts him in the 22% tax bracket. However, he doesn’t owe 22% of $60,000, which would be $13,200 ($60,000 x .22 = $13,200). He actually owes less.
The first $11,000 of Nicholas’s income is taxed at the 10% marginal tax rate, which results in $1,100 of tax.
The next $33,725 of his income (i.e., from $11,001 to $44,725) is taxed at the 12% marginal tax rate, which adds $4,047 of tax.
And, finally, the remaining $15,275 of Nicholas’s income (i.e., from $44,726 to $60,000) is taxed at the 22% rate, which comes to $3,361 of tax.
As a result, Nicholas’s total tax, when all of the separate amounts are added up, comes to $8,508, which is $4,692 less than the $13,200 tax if a flat 22% applied to all his income.
You can also see this calculation method play out in the various federal income tax brackets shown above. You’ll notice that, except for the 10% tax bracket, the tax calculations always begin with a dollar amount that is added to the amount taxed at the bracket’s corresponding marginal tax rate. The dollar amounts represent the tax due on all taxable income in each lower tax bracket.
So, looking at the 22% tax bracket above for single filers, you can see that the tax on income from the 10% and 12% brackets for the 2023 tax year equals $5,147—which is exactly the amount calculated for Nicholas in the example above ($1,100 + $4,047 = $5,147). Then, to determine the total tax amount, the tax rate tied to the taxpayer’s tax bracket is applied to the remaining income (i.e., the amount over the previous bracket’s upper threshold). The resulting amount is added to the tax from the lower brackets.
It’s important to note, though, that the tax amount resulting from use of the tax brackets isn’t necessarily what you will owe the IRS when your tax return is finished. After the tax is calculated, your final tax bill could be lower once any tax credits, withheld taxes, or estimated tax payments are subtracted from the total.
In some cases, your credits, withholding, and estimated payments can surpass the amount calculated using the tax brackets, in which case you might be due a refund.
Related: Earned Income Tax Credit [2022]: How Much, Eligibility + More
What’s Your Effective Tax Rate?
There’s a different tax rate that you may have heard of: an effective tax rate. It refers to the percentage of your taxable income paid in income tax. Because use of marginal tax rates results in your income being taxed at different rates, it’s not necessarily the best indicator of your overall income tax burden. Many people believe using your effective tax rate provides a clearer picture.
To calculate your effective tax rate, divide your tax as calculated using the tax brackets or tax tables by your taxable income. To illustrate using the example above, Nicholas’s effective tax rate is 14.18% ($8,508 ÷ $60,000 = 0.1418), even though he falls within the 22% tax bracket.
2022 Federal Income Tax Brackets and Rates
If you requested a filing extension for your 2022 return (which was originally due on April 18, 2023), you still might need the 2022 tax brackets. Or you might just want to compare the 2022 and 2023 tax brackets to see how they’ve change.
So, for those who have a need to see them, here are the federal income tax brackets for the 2022 tax year.
2022 Tax Brackets for Single Filers
| Tax Rate | Taxable Income Range | Tax Calculation |
|---|---|---|
| 10% | $0 to $10,275 | 10% of taxable income |
| 12% | $10,276 to $41,775 | $1,027.50 plus 12% of amount over $10,275 |
| 22% | $41,776 to $89,075 | $4,807.50 plus 22% of amount over $41,775 |
| 24% | $89,076 to $170,050 | $15,213.50 plus 24% of amount over $89,075 |
| 32% | $170,051 to $215,950 | $34,647.50 plus 32% of amount over $170,050 |
| 35% | $215,951 to $539,900 | $49,335.50 plus 35% of amount over $215,950 |
| 37% | $539,901 or more | $162,718 plus 37% of amount over $539,900 |
2022 Tax Brackets for Married Couples Filing Jointly and Surviving Spouses
| Tax Rate | Taxable Income Range | Tax Calculation |
|---|---|---|
| 10% | $0 to $20,550 | 10% of taxable income |
| 12% | $20,551 to $83,550 | $2,055 plus 12% of amount over $20,550 |
| 22% | $83,551 to $178,150 | $9,615 plus 22% of amount over $83,550 |
| 24% | $178,151 to $340,100 | $30,427 plus 24% of amount over $178,150 |
| 32% | $340,101 to $431,900 | $69,295 plus 32% of amount over $340,100 |
| 35% | $431,901 to $647,850 | $98,671 plus 35% of amount over $431,900 |
| 37% | $647,851 or more | $174,253.50 plus 37% of amount over $647,850 |
2022 Tax Brackets for Married Couples Filing Separately
| Tax Rate | Taxable Income Range | Tax Calculation |
|---|---|---|
| 10% | $0 to $10,275 | 10% of taxable income |
| 12% | $10,276 to $41,775 | $1,027.50 plus 12% of amount over $10,275 |
| 22% | $41,776 to $89,075 | $4,807.50 plus 22% of amount over $41,775 |
| 24% | $89,076 to $170,050 | $15,213.50 plus 24% of amount over $89,075 |
| 32% | $170,051 to $215,950 | $34,647.50 plus 32% of amount over $170,050 |
| 35% | $215,951 to $323,925 | $49,335.50 plus 35% of amount over $215,950 |
| 37% | $332,926 or more | $87,126.75 plus 37% of amount over $323,925 |
2022 Tax Brackets for Head-of-Household Filers
| Tax Rate | Taxable Income Range | Tax Calculation |
|---|---|---|
| 10% | $0 to $14,650 | 10% of taxable income |
| 12% | $14,651 to $55,900 | $1,465 plus 12% of amount over $14,650 |
| 22% | $55,901 to $89,050 | $6,415 plus 22% of amount over $55,900 |
| 24% | $89,051 to $170,050 | $13,708 plus 24% of amount over $89,050 |
| 32% | $170,051 to $215,950 | $33,148 plus 32% of amount over $170,050 |
| 35% | $215,951 to $539,900 | $47,836 plus 35% of amount over $215,950 |
| 37% | $539,901 or more | $161,218.50 plus 37% of amount over $539,900 |
Related: Capital Gains Tax: What Is It, Rates, Home Sales + More
Inflation Adjustments for 2023 Tax Brackets
You’ll notice that the tax rates for 2023 are the same as the rates for 2022: 10%, 12%, 22%, 24%, 32%, 35%, and 37%. However, the taxable income ranges for each federal income tax bracket are adjusted each year to account for inflation. As a result, the tax brackets for 2023 are different than the 2022 brackets.
In fact, the inflation adjustments for the 2023 brackets are more dramatic than what we’ve seen in recent years because of the higher costs for goods and services we’ve suffered through lately. This shows up in the form of larger increases to the “width” of the taxable income ranges than what we normally see. (The width of each range refers to the gap between the bracket’s lower and upper income thresholds.)
As an example, the 22% tax bracket for single filers applied to $45,850 of income for the 2021 tax year (i.e., the difference between $40,526 and $86,375), but applied to $47,300 of income for 2022 (i.e., the difference between $41,776 and $89,075). That’s an increase of 3.2% to the bracket’s width from 2021 to 2022. However, for the 2023 tax year, the 22% federal tax bracket for single taxpayers covers $50,650 of income ($44,726 to $95,375), which represents a 7.1% increase in the bracket’s width from 2022 to 2023—more than double the growth rate from the previous year.
But don’t be alarmed. Wider brackets are actually a good thing for many people with an income that’s growing slower than the rate of inflation, because it lessens the chance that they’ll be bumped up to a higher tax bracket (i.e., it reduces “bracket creep”).
For example, if Andrew, who is a single filer, sees his taxable income grow from $89,000 to $94,000 from 2022 to 2023, he’s still going to be in the 22% bracket when he completes his 2023 tax return next year. However, if the bracket’s width had increased by a more modest amount for 2023—say, by 4%—then Andrew would find himself in the 24% bracket, which would likely apply to single filers once 2023 income exceeds about $92,640. But remember: Only the portion of income in that particular tax bracket gets taxed at your marginal tax rate. So, Andrew’s effective tax rate wouldn’t materially increase as a result of a small portion of his income falling into a higher tax bracket.
Larger increases to the brackets’ width can also push you down to a lower tax bracket. For instance, if Cindy’s income rises from $42,000 to $44,000 from 2022 to 2023, she would drop from the 22% bracket to the 12% bracket for 2023. But, hypothetically, if the 22% bracket’s width had increased by only 4% for 2023, then Cindy likely would have remained in the 22% bracket for 2023, which probably would have kicked in right around the $43,450 mark.
Related: Student Loan Interest Deduction: How Much, Eligibility + More
Tips for Lowering Your Tax Rate
What can you do if it looks like you might be in a higher tax bracket for 2023? My advice is to do whatever you can between now and the end of the year to lower your taxable income. If you can bring your taxable income down enough, you just might find yourself in a lower tax bracket when you file your federal tax return next year.
Here are a few common ways to bring down your taxable income for the year.
Contribute to “Pre-Tax” Retirement Savings Accounts
With “pre-tax” retirement accounts, you get a tax break when you put money in the account. For example, if you squirrel away money in a traditional IRA, you can generally claim a tax deduction for the amount contributed. Likewise, if you have money taken out of your paycheck and deposited into a traditional 401(k) account, that money isn’t included as income on your W-2 form. Either way, your taxable income for the year is lower, which could put you in a lower tax bracket.
YATI Tip: If you’re self-employed or a small business owner, you can get similar results by opening and contributing to a SEP IRA, SIMPLE IRA, or solo 401(k) plan.
However, make sure you don’t exceed the contribution limits for these types of retirement accounts. Doing so can result in a stiff penalty from the IRS.
For 2023, the annual contribution limit for all your IRAs is $6,500 if you’re under age 50, or $7,500 if you’re 50 or older. (This extra $1,000, which is only allowed for people who are at least 50 years old, is called a “catch-up” contribution.)
If you have a 401(k) plan at work, you can contribute a total of $22,500 to the plan in 2023 if you’re under 50 years. If you’re at least 50 years old, you can put in up to $30,000.
Related: Should You Max Out Your 401(k) Each Year? [Yes…and No]
Put Money Into a Health Savings Account
If you’re covered by a qualified high-deductible health plan (HDHP), you can also make “pre-tax” contributions to a health savings account (HSA). The tax deduction you get for the money contributed to an HSA will lower your taxable income … just like contributions to a traditional IRA.
You also have to worry about the annual HSA contribution limits … just like with a traditional IRA or 401(k) plan. The 2023 HSA contribution limits are:
- $3,850 if you have self-only coverage under a HDHP
- $7,750 if you have family coverage under a HDHP
If you’re at least 55 years old at the end of the year, you can contribute an additional $1,000 for the year.
Related: Best HSA Providers
Give More to Charity
If you plan to itemize instead of claiming the standard deduction, giving more to charity can lower your taxable income. That’s because itemizers can generally deduct contributions or gifts to religious, charitable, educational, scientific, or literary organizations.
You can get a deduction for cash or non-cash donations. So, if you want to declutter your house, empty out those closets of any no-longer-needed linens, clothes, shoes, household goods, and anything else you can think of to donate. Doing so could lower your taxable income and cut your 2023 tax bill.
If you volunteer for a charitable organization, you can also deduct 14¢ for every mile you drive during the year while volunteering. Parking fees and tolls you pay while volunteering for a charitable organization are also deductible, as long as you aren’t reimbursed for those costs.
You might also get an income tax deduction for donating stock to charity (although the deduction could be limited to a percentage of your adjusted gross income). If you donate appreciated property like stock to a charitable organization, you also won’t have to pay capital gains tax on the increase in value.
However, you generally can’t deduct donations or gifts for which you received a benefit in return (e.g., food, entertainment, or merchandise). In that case, you can only deduct the value of your gift or donation that’s more than the value of the benefit you received.
Pre-Pay Deductible Expenses
Paying certain expenses in 2023, instead of in 2024, could also lower your taxable income for the year.
For example, if your child is attending college and you have a tuition bill due in January, paying the bill in December could allow you to claim the American Opportunity tax credit in 2023—or claim a larger credit in 2023.
If you itemize, scheduling medical or dental appointments in 2023 that you otherwise wouldn’t bother with until next year could also help lower this year’s taxable income. Just be aware that you can only deduct medical or dental expenses that exceed 7.5% of your adjusted gross income. So, if you’re still not going to spend that much on medical or dental procedures, then it’s not worth scheduling appointments early. However, if you’ve already exceeded that threshold, then pack as many other medical or dental expenses into the year as possible, since you might not be able to deduct the additional medical bills next year.
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