Learn more about the different IRS tax brackets and find out which tax bracket you and your family fall under.
What are the different IRS tax brackets and what do they have to do with you? Well, if you're a taxpayer in the US, then you fall under one of these tax brackets. This then helps determine just how much you owe in taxes each year. Inflation could potentially impact the following.
Tax Bracket Definition
Tax brackets are the categories of tax percentages that the IRS uses to organize how much different categories of taxpayers should pay in taxes each year. Each tax bracket comes with a tax rate and income cut offs for the least and highest amount of income someone can make to be in that bracket and get that particular rate.
How Tax Brackets Work
First of all, each tax bracket doesn't have a name but rather a tax percentage to distinguish which bracket is which. So there is a 10%, 12%, 22%, 24%, 32%, 35% and 37% tax bracket. That is 7 in total. Which percentage applies to you will depend on the following 2 factors:
- Your Tax Filing Status
- How Much You Made That Year
Once your tax percentage category is determined, there is a total amount of taxes owed by taxpayers within that category. Then, the bracket's corresponding percentage rate is applied to however much money the taxpayer made over the minimum amount of income for that category.
Tax Example
For example, if you are a single filer and you made $20,000 in total income that tax year, then you would fall under the 12% tax bracket with minimum and maximum income requirements of $10,276 to $41,775. This means that you would owe $1,027.50 in taxes for that year, plus 12% of however much you made over $10,276. The amount of money you made above $10,276 was $9,725. 12% of $9,725 is $1,167. So in total, this taxpayer would have owed $2,194.50 for this tax year.
What is My Tax Bracket?
To determine your tax bracket, there are just a few steps you'll need to take. Your tax bracket depends on several variables like how much you make and how you file your taxes, and even what year you are filing for.
What's My Tax Filing Status?
The first thing you need to determine is your tax filing status, especially because this can sometimes change. Are you a single filer? Are you married but filing separately from your partner? Are you married and filing jointly with your partner? Or are you single and considered not married, but you do have a household where you are the primary source of financial support. This instance would mean you'd want to file as a head of household.
What Was My Total Income This Year?
The next thing you'll want to determine is how much total income you earned in the past year. This is the second determining factor in what tack bracket you will fall under for that year.
2022 Tax Brackets
There are 7 current tax brackets that the IRS uses. Each one comes with its own tax rate percentage and income ranges. While the tax percentages remain the same, the taxable income and taxes owed for each tax rate change depending on how you file your taxes. For example, you may fall under a different tax bracket depending on how much you make and whether you file jointly with a partner or as a single filer.
Alt Text: tax brackets for single filers table
Alt Text: tax brackets for married filing jointly table
Alt Text: tax brackets for married filing separately table
Alt Text: tax brackets for head of household jointly table
In Conclusion,
Tax brackets are one of the most important aspects of paying taxes each year. They can help you estimate how much you will owe each year and potentially how much you can expect back in a tax return. By learning what tax bracket you fall under, you can know where you stand with the IRS and have a clearer understanding of your tax obligations.
