What Are Federal Tax Brackets?

In the U.S., the government taxes different levels of income at different rates. Federal income tax brackets indicate the rate of tax for each level of taxable income for each filing status. As a result, as taxpayer income increases, it is taxed at higher rates, and taxpayers with lower incomes pay taxes at lower rates. This approach is referred to as a progressive tax system.

Federal tax brackets for 2023

The IRS revises the federal tax brackets to address the annual effects of inflation and tax law changes. The IRS set these ratios for tax returns filed in 2023 for single and married filing separately filers (and married couples filing jointly):

• 10% on income up to $11,000 ($22,000)
• 12% on income over $11,000 ($22,000)
• 22% on income over $44,725 ($89,450)
• 24% on income over $95,375 ($190,750)
• 32% on income over $182,100 ($364,200)
• 35% on income over $231,250 ($462,500)
• 37% on income over $578,125 ($693,750)

Taxable income and the brackets a taxpayer's income falls under depend on both income and deductions. Adjustments to income, the standard deduction, and tax credits affect the final amount of tax to be paid.

Most states have state tax brackets that tax income similar to the federal tax bracket approach, but state tax brackets are different from and are lower than the federal ones.