Now that you’ve filed your 2021 taxes, you’re probably heaving a sigh of relief. But although the 2021 tax season is in the past, you’ll need to start preparing for the current tax year if you don’t want to end up with a huge tax bill. And the first step to doing that is to know what your tax bracket is. This will help you modify your income tax withholding and use tax-saving strategies to avoid a big tax bill next year.
What are tax brackets, and how do they work?
The United States uses a progressive taxation system. What this means is that people who earn higher incomes pay more taxes. Remember that being in a certain tax bracket doesn’t mean you have to pay that rate on your entire income. For instance, let’s say you’re an individual filer with an income of $33,000. In 2021, that would have put you in the 12% tax bracket. However, you would have only paid a tax rate of 10% on the first $9,950. And you’d pay 12% on the balance. What’s more, you can also reduce your tax bills if you qualify for tax deductions and credits. Regardless of how much tax you need to pay, you need to be aware of your tax bracket first.
Brackets for taxable income earned in 2022
- The tax rate is 37% for single filers with incomes over $539,900 ($647,850 for spouses filing jointly)
- The tax rate is 35% for single filers with incomes over $215,950 ($431,900 for spouses filing jointly)
- The tax rate is 32% for single filers with incomes over $170,050 ($340,100 for spouses filing jointly)
- The tax rate is 24% for single filers with incomes over $89,075 ($178,150 for spouses filing jointly)
- The tax rate is 22% for single filers with incomes over $41,775 ($83,550 for spouses filing jointly)
- The tax rate is 12% for single filers with incomes over $10,275 ($20,550 for spouses filing jointly)
- The tax rate is 10% for single filers with incomes of $10,275 or less ($20,550 for spouses filing jointly)
Brackets for taxable income earned in 2021
- The tax rate was 37% for single filers with incomes over $523,600 ($628,300 for spouses filing jointly)
- The tax rate was 35% for single filers with incomes over $209,425 ($418,850 for spouses filing jointly)
- The tax rate was 32% for single filers with incomes over $164,925 ($329,850 for spouses filing jointly)
- The tax rate was 24% for single filers with incomes over $86,375 ($172,750 for spouses filing jointly)
- The tax rate was 22% for single filers with incomes over $40,525 ($81,050 for spouses filing jointly)
- The tax rate was 12% for single filers with incomes over $9,950 ($19,900 for spouses filing jointly)
- The tax rate was 10% for single filers with incomes up to $9,950 ($19,900 for spouses filing jointly)