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Understanding Tax Brackets and Rates for 2023, Summaries of Tax Legislation and Financial Law

Conclusion Understanding how tax brackets work helps you see how your income is taxed progressively, meaning you pay different rates depending on the amount of income within each bracket. The changes for 2023 adjust for inflation and ensure that you’re taxed fairly based on your income.

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Uploaded on 01/25/2025

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Understanding Tax Brackets and Rates for 2023
What Are Tax Brackets?
In the U.S., the federal income tax system is progressive, meaning that as your income
increases, you pay a higher rate on the portion of income within each tax bracket. The IRS
divides income into ranges, and each range is taxed at a specific rate.
2023 Tax Brackets
For individuals and married couples filing jointly, here are the tax rates for 2023:
Single Filers:
10%: Up to $11,000
12%: $11,001 to $44,725
22%: $44,726 to $95,375
24%: $95,376 to $182,100
32%: $182,101 to $231,250
35%: $231,251 to $578,100
37%: Over $578,100
Married Filing Jointly:
10%: Up to $22,000
12%: $22,001 to $89,450
22%: $89,451 to $190,750
24%: $190,751 to $364,200
32%: $364,201 to $462,500
35%: $462,501 to $693,750
37%: Over $693,750
How Tax Brackets Work
Progressive Tax System: Tax rates only apply to income within each bracket. For
example, if you are a single filer earning $50,000:
The first $11,000 is taxed at 10%.
The next $33,725 is taxed at 12%.
The remaining $5,275 is taxed at 22%.
Your effective tax rate (what you actually pay as a percentage of total income) will be lower
than your marginal tax rate (the rate that applies to your last dollar of income).
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Understanding Tax Brackets and Rates for 2023

What Are Tax Brackets?

In the U.S., the federal income tax system is progressive , meaning that as your income increases, you pay a higher rate on the portion of income within each tax bracket. The IRS divides income into ranges, and each range is taxed at a specific rate.

2023 Tax Brackets

For individuals and married couples filing jointly , here are the tax rates for 2023 :

Single Filers: ○ 10%: Up to $11, ○ 12%: $11,001 to $44, ○ 22%: $44,726 to $95, ○ 24%: $95,376 to $182, ○ 32%: $182,101 to $231, ○ 35%: $231,251 to $578, ○ 37%: Over $578, ● Married Filing Jointly: ○ 10%: Up to $22, ○ 12%: $22,001 to $89, ○ 22%: $89,451 to $190, ○ 24%: $190,751 to $364, ○ 32%: $364,201 to $462, ○ 35%: $462,501 to $693, ○ 37%: Over $693,

How Tax Brackets Work

Progressive Tax System : Tax rates only apply to income within each bracket. For example, if you are a single filer earning $50,000 : ○ The first $11,000 is taxed at 10%. ○ The next $33,725 is taxed at 12%. ○ The remaining $5,275 is taxed at 22%.

Your effective tax rate (what you actually pay as a percentage of total income) will be lower than your marginal tax rate (the rate that applies to your last dollar of income).

What’s Taxable Income?

Your taxable income is what you earn after deductions (standard or itemized) and exemptions. It’s the amount used to calculate your taxes based on the brackets above.

Inflation Adjustments for 2023

Each year, the IRS adjusts tax brackets for inflation. This means that in 2023 , tax brackets have slightly increased compared to 2022, helping taxpayers avoid being pushed into higher brackets due to inflation. For example, the 10% bracket now applies to the first $11,000 of income for single filers (up from $10,275 in 2022).

Effective vs. Marginal Tax Rate

Marginal Tax Rate : The rate applied to your last dollar of income. This is the rate you hear about most often. ● Effective Tax Rate : The average tax rate you pay across all your income, which is typically lower because of the progressive system.