I remember my first (legit) paycheck.
I was working at a restaurant as a banquet waiter earning something around minimum wage in New York in the late ’90s. My paycheck was around $30 a shift and I had probably six shifts a week. So I had expected my first paycheck to be a little over $150 (this place deducted an amount for “food,” assuming you’d eat something there… which was a scam because no one ate anything during their shift — you were too busy!). But it was just over $100 after withholding and FICA.
That was my lovely introduction to taxes.
What’s always tricky about taxes in the United States is how complicated they are to understand. You have deductions, credits, exemptions, carryovers… the list goes on and on. Even if you knew every last deduction (and that would make you a tax accountant or a weirdo!), you’d still only know half the story.
Today, we will explain away one piece of the tax puzzle: the federal tax brackets.
The brackets and the deductions (standard and itemized) are the two values that tend to change from year to year. They are not pegged to inflation or cost of living, but the IRS “manually” adjusts them every year to account for them. There are other credits and deductions that automatically change based on the Consumer Price Index released by the Bureau of Labor Statistics.
So how do the tax brackets and deductions work?
Table of Contents
🔃 Updated February 2024 with the 2024 tax brackets, as released by the IRS on November 9th, 2023.
How Federal Tax Brackets Work
Federal income tax is a progressive tax system. This means that you are taxed at a higher rate when you earn more.
It’s also a marginal tax system. Every dollar you earn is not taxed the same.
The 100,000th dollar is taxed more than your 1st dollar. And these taxes are assessed on your adjusted gross income. That’s your total income minus deductions.
So when Alexandria Ocasio-Cortez, United States Representative from New York, floated the idea of a top tax bracket of 70%, it didn’t mean the highest-earning taxpayers would pay 70% on all of their income.
Back in 1944, during World War 2, the top tax bracket was 94% and applied to income over $200,000. Due to inflation, $200,000 in 1944 has a buying power of $3,525,816 today. That means you would have had to earn more than $3.5 million before you would ever pay a 94% tax rate on a single dollar of income.
According to 2022 income data, less than 0.5% of U.S. households make over $1 million. That means the number that earns over $3.5 million is far, far less. (By comparison, the median wage in 2022 was just $40,847.)
Ocasio-Cortez seemed to suggest the top rate would only apply to incomes above $10 million. The number of households that earn that much in a year probably fit inside a classroom.
2024 Federal Income Tax Brackets
In November 2023, the IRS released the tax brackets for 2024 (along with other inflation-adjusted numbers).
| Tax Bracket | Single | Married Filing Jointly | Head of Household |
|---|---|---|---|
| 10% | $0 – $11,600 | $0 – $23,200 | $0 – $16,550 |
| 12% | $11,600 – $47,150 | $23,200 – $94,300 | $16,550 – $63,100 |
| 22% | $47,150 – $100,525 | $94,300 – $201,050 | $63,100 – $100,500 |
| 24% | $100,525 – $191,950 | $201,050 – $383,900 | $100,500 – $191,950 |
| 32% | $191,950 – $243,725 | $383,900 – $487,450 | $191,950 – $243,700 |
| 35% | $243,725 – $609,350 | $487,450 – $731,200 | $243,700 – $609,350 |
| 37% | $609,350+ | $731,200+ | $609,350+ |
If you’re single and you make $50,000 after subtracting deductions, exemptions, etc., you would pay:
- 10% on the first $11,600 = $1,160
- 12% on the next $35,550 = $4,266
- 22% on the last $2,850 = $627
You’d pay a total of $6,053 in taxes on $50,000 of income, or roughly 12%.
Your effective tax rate is just over 12% but you are in the 22% tax bracket. The next dollar you earn is taxed at 22%.
That’s just part one. Not every dollar you earn is actually taxed. 🙂
2024 Standard Deduction
With our tax system, your income is reduced by your deductions. You can take the standard deduction or you can itemize your deductions. When you itemize deductions, you may have to provide proof that you had those expenses. Itemized deductions are items like your mortgage interest, charitable contributions, student loan interest, and deductible taxes.
When you take the standard deduction, you don’t have to do anything. You just take it. The amount is based on your filing status.
Here are the 2024 standard deductions (with 2019 – 2023 figures for reference):
| Your Filing Status | 2024 | 2023 | 2022 | 2021 | 2020 | 2019 |
|---|---|---|---|---|---|---|
| Single | $14,600 | $13,850 | $12,950 | $12,550 | $12,400 | $12,200 |
| Married Filing Jointly | $29,200 | $27,700 | $25,900 | $25,100 | $24,800 | $24,400 |
| Married Filing Separately | $14,600 | $13,850 | $12,950 | $12,550 | $12,400 | $12,200 |
| Head of Household | $21,900 | $20,800 | $19,400 | $18,800 | $18,650 | $18,350 |
I always find it interesting when someone says, “It’s fine to pay a mortgage because the interest is tax-deductible.” Because while technically true, it’s not accurate.
To claim an itemized deduction, you would have had to spend money in the first place. You can claim the standard deduction without having to spend a penny.
If you had a choice between paying $10,000 in mortgage interest (deductible) or $10,000 in rent (not deductible), you wouldn’t prefer one over the other. In both cases, you’re paying $10,000 but you’d still claim the standard deduction (assuming no other itemized deductions).
There may be other reasons to carry a mortgage, but taxes isn’t one of them.
2024 Personal Exemptions
In previous years, there was a personal exemption that reduced your income.
It was gone starting in 2018. It’s gone until 2025.
In 2017, that amount was $4,050 and it phased out. Once your AGI peaked at $261,500 (or $313,800 for married filing jointly), it would start to phase out. You would claim that exemption for everyone in your family, including dependents. So a family of four would have four personal exemptions.
Since the latest tax law doesn’t expire until 2025, the personal exemption may be gone for a while. This was offset by an increase in the standard deduction, though that is little solace to folks who regularly itemize their deductions.
2024 Single vs. Head of Household
Ever wonder what the difference is between a single filer and a head of household filer? The head of household filing status seems to be much like a single filer except you get a few higher amounts, like a $21,900 standard deduction versus the single filer’s $14,600 deduction.
To be considered the head of household filing status, you must:
- Pay more than half the household expenses
- Be “considered unmarried” for the tax year
- Have a qualifying child or dependent
The first rule is straightforward — you have to pay more than half the household expenses. These include utility bills, mortgage or rent, insurance, groceries, etc.
The second rule is slightly trickier. You have to file a separate return from your spouse, pay for more than half the cost of home upkeep, not live with your spouse during the last six months of the tax year, have the qualifying person consider your home as their main home for the last 6 months of the year, and claim that person as a dependent.
Finally, the third rule is the same rule governing qualifying children or dependents throughout tax law.
Historical Tax Brackets (2018 – 2023)
Here are the tax brackets from 2018 through 2023:
2023 Federal Income Tax Brackets
In October 2022, the IRS released the tax brackets for 2023 (along with other inflation-adjusted numbers).
| Tax Bracket | Single | Married Filing Jointly | Head of Household |
|---|---|---|---|
| 10% | $0 – $11,000 | $0 – $22,000 | $0 – $15,700 |
| 12% | $11,000 – $44,725 | $22,000 – $89,450 | $15,700 – $59,850 |
| 22% | $44,725 – $95,375 | $89,450 – $190,750 | $59,850 – $95,350 |
| 24% | $95,375 – $182,100 | $190,750 – $364,200 | $95,350 – $182,100 |
| 32% | $182,100 – $231,250 | $364,200 – $462,500 | $182,100 – $231,250 |
| 35% | $231,250 – $578,125 | $462,500 – $693,750 | $231,250 – $578,100 |
| 37% | $578,125+ | $693,750+ | $578,100+ |
If you file “Married Filing Separately,” here is your table (broken out due to sizing):
| Tax Bracket | Married Filing Separately |
|---|---|
| 10% | $0 – $11,000 |
| 12% | $11,000 – $44,725 |
| 22% | $44,725 – $95,375 |
| 24% | $95,375 – $182,100 |
| 32% | $182,100 – $231,250 |
| 35% | $231,250 – $346,875 |
| 37% | $346,875+ |
2022 Federal Income Tax Brackets
Here are the federal income tax brackets for 2022 (these apply to income earned in 2021 as released by the IRS). The brackets are the same, and the income figures have been adjusted for inflation:
| Tax Bracket | Single | Married Filing Jointly | Head of Household |
|---|---|---|---|
| 10% | $0 – $10,275 | $0 – $20,555 | $0 – $14,650 |
| 12% | $10,275 – $41,775 | $20,555 – $83,550 | $14,650 – $55,900 |
| 22% | $41,775 – $89,075 | $83,550 – $178,150 | $55,900 – $89,075 |
| 24% | $89,075 – $170,050 | $178,150 – $340,100 | $89,075 – $170,050 |
| 32% | $170,050 – $215,950 | $340,100 – $431,900 | $170,050 – $215,950 |
| 35% | $215,950 – $539,900 | $431,900 – $647,850 | $215,950 – $539,900 |
| 37% | $539,900+ | $647,850+ | $539,900+ |
If you file “Married Filing Separately,” here is your table (broken out due to sizing):
| Tax Bracket | Married Filing Separately |
|---|---|
| 10% | $0 – $10,275 |
| 12% | $10,275 – $41,775 |
| 22% | $41,775 – $89,075 |
| 24% | $89,075 – $170,050 |
| 32% | $170,050 – $215,950 |
| 35% | $215,950 – $323,925 |
| 37% | $323,925+ |
2021 Federal Income Tax Brackets
Here are the federal income tax brackets for 2021 (these apply to income earned in 2021):
| Tax Bracket | Single | Married Filing Jointly | Head of Household |
|---|---|---|---|
| 10% | $0 – $9,950 | $0 – $19,900 | $0 – $14,200 |
| 12% | $9,950 – $40,525 | $19,900 – $81,050 | $14,200 – $54,200 |
| 22% | $40,525 – $86,375 | $81,050 – $172,750 | $54,200 – $86,350 |
| 24% | $86,375 – $164,925 | $172,750 – $329,850 | $86,350 – $164,900 |
| 32% | $164,925 – $209,425 | $329,850 – $418,850 | $164,900 – $209,400 |
| 35% | $209,425 – $523,600 | $418,850 – $628,300 | $209,400 – $523,600 |
| 37% | $523,600+ | $628,300+ | $523,600+ |
If you file “Married Filing Separately,” here is your table (broken out due to sizing):
| Tax Bracket | Married Filing Separately |
|---|---|
| 10% | $0 – $9,950 |
| 12% | $9,950 – $40,525 |
| 22% | $40,525 – $86,375 |
| 24% | $86,375 – $164,925 |
| 32% | $164,925 – $209,425 |
| 35% | $209,425 – $314,150 |
| 37% | $314,150+ |
2020 Federal Income Tax Brackets
Here are the federal income tax brackets for 2020 (these apply to income earned in 2020):
| Tax Bracket | Single | Married Filing Jointly | Head of Household |
|---|---|---|---|
| 10% | $0 – $9,875 | $0 – $19,750 | $0 – $14,100 |
| 12% | $9,875 – $40,125 | $19,750 – $80,250 | $14,100 – $53,700 |
| 22% | $40,125 – $85,525 | $80,250 – $171,050 | $53,700 – $85,500 |
| 24% | $85,525 – $163,300 | $171,050 – $326,600 | $85,500 – $163,300 |
| 32% | $163,300 – $207,350 | $326,600 – $414,700 | $163,300 – $207,350 |
| 35% | $207,350 – $518,400 | $414,700 – $622,050 | $207,350 – $518,400 |
| 37% | $518,400+ | $622,050+ | $518,400+ |
If you file “Married Filing Separately,” here is your table (broken out due to sizing):
| Tax Bracket | Married Filing Separately |
|---|---|
| 10% | $0 – $9,875 |
| 12% | $9,875 – $40,125 |
| 22% | $40,125 – $85,525 |
| 24% | $85,525 – $163,300 |
| 32% | $163,300 – $207,350 |
| 35% | $207,350 – $311,025 |
| 37% | $311,025+ |
2019 Federal Income Tax Brackets
Here are the federal income tax brackets for 2019 (these apply to income earned in 2019):
| Tax Bracket | Single | Married Filing Jointly | Head of Household |
|---|---|---|---|
| 10% | $0 – $9,700 | $0 – $19,400 | $0 – $13,850 |
| 12% | $9,700 – $39,475 | $19,400 – $78,950 | $13,850 – $52,850 |
| 22% | $39,475- $84,200 | $78,950 – $168,400 | $52,850 – $84,200 |
| 24% | $84,200 – $160,725 | $168,400 – $321,450 | $84,200 – $160,700 |
| 32% | $160,725 – $204,100 | $321,450 – $408,200 | $160,700 – $204,100 |
| 35% | $204,100 – $510,300 | $408,200 – $612,350 | $204,100 – $510,300 |
| 37% | $510,300+ | $612,350+ | $510,300+ |
If you file “Married Filing Separately,” here is your table (broken out due to sizing):
| Tax Bracket | Married Filing Separately |
|---|---|
| 10% | $0 – $9,700 |
| 12% | $9,700 – $39,475 |
| 22% | $39,475 – $84,200 |
| 24% | $84,200 – $160,725 |
| 32% | $160,725 – $204,100 |
| 35% | $204,100 – $306,175 |
| 37% | $306,175+ |
2018 Federal Income Tax Brackets
These are the federal income tax rates for income earned in 2018, kept for historical purposes:
| Tax Bracket | Single | Married Filing Jointly | Head of Household |
|---|---|---|---|
| 10% | $0 – $9,525 | $0 – $19,050 | $0 – $13,600 |
| 12% | $9,525 – $38,700 | $19,050 – $77,400 | $13,600 – $51,800 |
| 22% | $38,700 – $82,500 | $77,400 – $165,000 | $51,800 – $82,500 |
| 24% | $82,500 – $157,500 | $165,000 – $315,000 | $82,500 – $157,500 |
| 32% | $157,500 – $200,000 | $315,000 – $400,000 | $157,500 – $200,000 |
| 35% | $200,000 – $500,000 | $400,000 – $600,000 | $200,000 – $500,000 |
| 37% | $500,000+ | $600,000+ | $500,000+ |
If you file “Married Filing Separately,” here is your table (broken out due to sizing):
| Tax Bracket | Married Filing Separately |
|---|---|
| 10% | $0 – $9,525 |
| 12% | $9,525 – $38,700 |
| 22% | $38,700 – $82,500 |
| 24% | $82,500 – $157,500 |
| 32% | $157,500 – $200,000 |
| 35% | $200,000 – $300,000 |
| 37% | $300,000+ |
Happy tax season and if you’re expecting a refund, remember to file your taxes as soon as possible!
Stewart Graham says
Thanks, Jim, for the discussion on 2018 income taxes. I was just starting to do some tax planning for 2018!
Matt says
“Ocasio-Cortez seemed to suggest the top rate would only apply to incomes above $10 million. The number of households who earn that much in a year probably fit inside a classroom.”
Until the government decides to slide the scale downward over the years, roping in more and more people; until it comes to our homes – squeezing the middle class out of existence.
If you believe that’s what the future will bring if we institute a higher tax rate on high earners, then there’s no convincing you to think otherwise. Best of luck.
Dom says
A classroom in the bay area alone wouldn’t fit all the $10M+ incomes. Maybe not even a school would fit them (just the bay area). Do a little more homework before touting stats like that.
Dom says
Try 1.3 million in the US with annual incomes over $10M.
Dexter Siner says
What are the 2019 deduction for seniors age 65+?
If you are aged or blind, you get an additional $1,300.
S Awes says
Am I correct from a reading of your article:
1) For lower income earners the amount of increase to the standard deduction in 2018 was greater that the 2017 combined sum for standard deduction and the personal exemption in 2017? … a net benefit to these earners?
2) You suggest the tax advantage of owning a home isn’t a valid criteria in making that choice because of income limits for taking the deduction; however all other criteria / concerns aside (market timing, tornado disaster, etc), it’s certainly a criteria to account for if you have taxable income and are comparing a mortgage to a similar rental payment, right? I guess, I don’t fully understand your criticism here? Obviously the “own vs. buy decision” still has to consider other costs such as maintenance, parking if renting, insurance differences, and PMI, but seems there’s tax benefit are valid also… why suggest otherwise? Appreciate your feedback.
1. Yes. The standard deduction in 2018 was $12,000 and the standard deduction in 2017 was $6,350. The personal exemption in 2017 was $4,080.
2. My point was that the tax advantage of owning a home (and paying interest on a mortgage) was significantly limited by the cap. Depending on how much you pay in interest and property taxes, you may have gotten a much bigger tax deduction before the cap was put in place. Whether you buy or rent, you don’t get a tax benefit for maintenance, parking, or insurance.