What are the IRS tax brackets? What are the new federal tax brackets for 2023? Answers here

Business Elisabeth BuchwaldDaniel de Visé 09/01/2024

Every year, the Internal Revenue Service announces new tax brackets, tiers of income that are taxed at different rates under our nation's progressive tax system.

Each tier of income is taxed at a progressively higher rate. You pay the lowest tax rate on the lowest tier of income, a slightly higher rate on the next-higher income tier, and so on. The higher your income, the higher your tax rate, but the highest rate applies only to the highest tier of income that you reach.

Tax brackets rise with inflation. The brackets for 2023, reflected on the tax return you will file in 2024, are slightly higher than the ones for 2022.

How do tax brackets work?

A tax bracket is a tier of incomes subject to a particular income tax rate. In the U.S., there are seven tax brackets.

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Here's how it works: Let's say you earned $75,000 in 2023, and you're single. For the first $11,000 of that income, you'll pay the lowest 2023 tax rate, 10%, on that tier of income. For the tier of income between $11,001 and $44,725, you'll pay a 12% tax rate. For all of your income above $44,726, you'll pay tax at a much steeper rate, 22%.

Federal income tax bracket 2023

The IRS uses inflation data to adjust tax brackets for the upcoming tax year. If you got a raise to keep up with inflation in 2023, you'll likely face roughly the same tax rate as last year, all else being equal. If your salary rose faster than inflation, you may creep into a higher tax bracket. If your wages didn't keep up with inflation, you could top out in a lower tax bracket.

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What is the top tax bracket?

The highest individual tax bracket is 37%. In 2023, it applied to any income beyond $578,125 for single people. For married people filing jointly, the top rate kicks in at $693,750 in income. (For marrieds filing separately, the cutoff is $346,875.)

2023 tax brackets

Here are the 2023 tax brackets, the ones that will apply on the tax return you file in 2024:

For individual filers:

◾ 37% for incomes over $578,125.

◾ 35% for incomes over $231,250.

◾ 32% for incomes over $182,100.

◾ 24% for incomes over $95,375.

◾ 22% for incomes over $44,725.

◾ 12% for incomes over $11,000.

◾ 10% for income below $11,000.

For married couples filing jointly:

◾ 37% for income greater than $693,750.

◾ 35% for incomes over $462,500.

◾ 32% for incomes over $364,200.

◾ 24% for incomes over $190,750.

◾ 22% for incomes over $89,450.

◾ 12% for incomes over $22,000.

◾ 10% for income below $22,000.

Head of household tax bracket

For tax purposes, the IRS generally defines a head of a household as a parent who pays for more than half of a household's expenses. Heads of household have higher income thresholds for each tax bracket than individual filers, to account for the additional costs they cover.

The head of household tax brackets for 2023 are:

37% on the portion of income above $578,100.
35% on the portion of income between $231,251 and $578,100.
32% on the portion of income between $182,101 and $231,250.
24% on the portion of income between $95,351 and $182,100.
22% on the portion of income between $59,851 and $95,350.
12% on the portion of income between $15,701 and $59,850.
10% on income below $15,700.

More on taxes:Older adults can save on 2023 taxes by claiming an extra deduction. Here's how to do it.

Are 2023 tax brackets the same as 2022?

No. The thresholds increased for each of the seven tax brackets.

Tax brackets 2024 vs 2023

The IRS has already released tax brackets for 2024, the taxes you will file in 2025.

For the top individual tax bracket, the 2024 income threshold was raised from $578,126 to $609,351. This means that more than $30,000 in individual income will be taxed at 35% instead of 37%.

Here are the other 2024 tax brackets for individual filers:

35% for incomes over $243,725.
32% for incomes over $191,950.
24% for incomes over $100,525.
22% for incomes over $47,150.
12% for incomes over $11,600.
10% for income below $11,600.

2024 tax brackets for married couples filing joint returns are:

37% for income greater than $731,200.
35% for incomes over $487,450.
32% for incomes over $383,900.
24% for incomes over $201,050.
22% for incomes over $94,300.
12% for incomes over $23,200.
10% for income below $23,200.

How can I lower my tax bracket?

There are many ways you can lower your tax bracket. If you're married, filing a joint return with your spouse could qualify you for a lower tax bracket. Or, depending on your income and circumstances, you may lower your tax bracket by filing an individual return.

Another way to lower your tax bracket is by contributing to a 401(k), if your employer offers one. This will lower your taxable income, which can put you in a lower bracket. If your employer doesn't offer a 401(k), contributions to a traditional Individual Retirement Account could help you qualify for a tax deduction, which could also lower your bracket.

You may also want to run the numbers on taking the standard deduction instead of itemized deductions, since it could put you in a lower bracket, depending on your financial situation.