As a citizen of the United States of America, one of the most important things you should know is your tax bracket that is in line with your income. In the United States, there are seven tax brackets for most ordinary income for the 2023 tax year: 10 percent, 12 percent, 22 percent, 24 percent, 32 percent, 35 percent, and 37 percent.
In the USA, your tax bracket depends on your taxable income and your filing status: single, married filing jointly or qualifying widow(er), married filing separately and head of household. Usually, as you move up the pay scale, you also move up the tax scale. That’s to say that your tax bracket increases as you income also increases
In this article, you will get to know what a Tax Brackets really means, the latest tax bracket in the United States of America for the year 2022, how the tax bracket works in USA, how to calculate your tax bracket as a salary earner in the United States and lots more.
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What are Tax Brackets?
Tax bracket is defined as the range of incomes subject to a certain income tax rate. Tax brackets result in a progressive tax system, in which taxation progressively increases as an individual’s income grows.
Low incomes fall into tax brackets with relatively low income tax rates, while higher earnings fall into brackets with higher rates.
Tax Bracket in USA 2023
The list below shows the tax Bracket in the United States of America for 2022. You can pay your tax accordingly, if you fall under any of the following income rate,
10% $0 to $10,275 $0 to $14,650 $0 to $20,550 $0 to $10,275
12% $10,276 to $41,775 $14,651 to $55,900 $20,551 to $83,550 $10,276 to $41,775
22% $41,776 to $89,075 $55,901 to $89,050 $83,551 to $178,150 $41,776 to $89,075
24% $89,076 to $170,050 $89,051 to $170,050 $178,151 to $340,100 $89,076 to $170,050
32% $170,051 to $215,950 $170,051 to $215,950 $340,101 to $431,900 $170,051 to $215,950
35% $215,951 to $539,900 $215,951 to $539,900 $431,901 to $647,850 $215,951 to $323,925
37% $539,901 or more $539,901 or more $647,851 or more $323,926 or more
How tax brackets works in the United States of America
Do you want to knock how tax rate is calculated in the United States of America? Are you wondering if you are paying the right tax that suits your monthly income?
As a citizen of the United States of America, you can know which tax bracket your earnings will fall under, you could do the calculation yourself by using the calculation given below or you can visit the IRS website, which provides highly detailed tax filing statuses in increments of $50 of taxable income up to $100,000.16
How to calculate your tax bracket?
This is how to calculate your tax bracket in the United States of America:
- For Single filers with less than $9,950 in taxable income are subject to a 10% income tax rate (the lowest bracket).
- For Single filers who earn more than $9,950 will have the first $9,950 taxed at 10%, but earnings beyond the first bracket and up to $40,525 will be taxed at a 12% rate (the next bracket).
Earnings from $40,526 to $86,375 are taxed at 22%, the third bracket.
Let’s Consider the following tax responsibility for a single filer with a taxable income of $50,000 in 2022:
The first $9,950 is taxed at 10%: $9,950 × 0.10 = $995
Then $9,951 to $40,525, or $30,574, is taxed at 12%: $30,574 × 0.12 = $3,669
Finally, the top $9,476 (what’s left of the $50,000 income) is taxed at 22%: $9,476 × 0.22 = $2,085
Add the taxes owed in each of the brackets:
Total taxes: $995 + $3,668 + $2,085 = $6,748
The individual’s effective tax rate is approximately 13.5% of income:
Divide total taxes by annual earnings: $6,748 ÷ $50,000 = 0.135
Multiply 0.135 by 100 to convert to a percentage, which yields 13.5%.
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