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For individuals and married parties filing taxes, it is important to understand the basic income tax formula:

[(Income – Deductions) x Tax Rate] – Credits & Payments = Taxes Owed/Tax Refund

Clearly from this formula, taxpayers with more income or higher tax rates will ultimately owe more taxes barring other considerations.

How Tax Rates Work

There are seven tax rates applicable to individual income taxes, typically identified as: 10%, 12%, 22%, 24%, 32%, 35%, and 37%.

Tax rates are applied in a stair-step pattern, where the first ($X) is taxed at 10% and the next ($Y) is taxed at 12%. So a person in the 12% tax bracket with $Z would pay 10% for the first $X and 12% for anything over that. The range of income that each tax rate applies to is known as a tax bracket (e.g., 22% applies to income earned that is [more than 41,775, less than $89,076])

($X * 10%) + [($Z – $X) * 12%]

To demonstrate, we’ll use the tax rate system for single taxpayers in 2022.

Because Michelle is in the 3rd tax bracket, we can assume she has maxed out the first two levels (she has $10,275 taxed at 10% and another $31,500 taxed at 12% (total $41,775). The remaining $33,225 is taxed at 22%.

The applicable tax rate for an individual will vary and is based upon their income level and filing status. In 2023, the income level categorizations will change under the Inflation Reduction Act to adjust for rising inflation. This means that starting January 1, 2023, income received may be taxed at a different rate than income received in 2022.

Single

Tax Rate	Single (2022)	Single (2023)
10%	$0 – $10,275 10% of Taxable Income	$0 – $11,000 10% of Taxable Income
12%	$10,276 – $41,775 $1,027.50 + (12% * Income over $10,275)	$11,001 – $44,725 $1,100.00 + (12% * Income over $11,000)
22%	$41,776 – $89,075 $4,807.50 + (22% * Income over $41,775)	$44,726 – $95,375 $5,147.00 + (22% * Income over $44,725)
24%	$89,076 – $170,050 $15,213.50 + (24% * Income over $89,075)	$95,376 – $182,100 $16,290.00 + (24% * Income over $95,375)
32%	$170,051 – $215,950 $34,647.50 + (32% * Income over $170,050)	$182,101 – $231,250 $37,104.00 + (32% * Income over $182,100)
35%	$215,951 – $539,900 $49,335.50 + (35% * Income over $215,950)	$231,251 – $578,125 $52,832.00 + (35% * Income over $231,250)
37%	$539,901+ $162,718.00 + (37% * Income over $539,900)	$578,126+ $174,238.25 + (37% * Income over $578,125)

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Married Filing Jointly (and Qualifying Widower)

For fairness, tax rates for married couples are generally twice that of single individuals.

Tax Rate	Married Filing Jointly (2022)	Married Filing Jointly (2023)
10%	$0 – $20,550 10% of Taxable Income	$0 – $22,000 10% of Taxable Income
12%	$20,551- $83,550 $2,055.00 + (12% * Income over $20,551)	$22,001 – $89,450 $2,200.00 + (12% * Income over $22,000)
22%	$83,551 – $178,150 $9,615.00 + (22% * Income over $83,550)	$89,451 – $190,750 $10,294.00 + (22% * Income over $89,450)
24%	$178,151 – $340,100 $30,427.00 + (24% * Income over $178,150)	$190,751 – $364,200 $32,580.00 + (24% * Income over $190,750)
32%	$340,101 – $431,900 $69,295.00 + (32% * Income over $340,100)	$364,201 – $462,500 $74,208.00 + (32% * Income over $364,200)
35%	$431,901 – $647,850 $98,671.00 + (35% * Income over $431,900)	$462,501 – $693,750 $105,664.00 + (35% * Income over $462,500)
37%	$647,851+ $174,253.50 + (37% * Income over $647,850)	$693,751+ $186,601.50 + (37% * Income over $693,750)

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Married Filing Separately

Married Filing Separately is usually similar to the Single tax brackets until you reach the 35% – 37% brackets.

Tax Rate	Married Filing Separately (2022)	Married Filing Separately (2023)
10%	$0 – $10,275 10% of Taxable Income	$0 – $11,000 10% of Taxable Income
12%	$10,276 – $41,775 $1,027.50 + (12% * Income over $10,275)	$11,001 – $44,725 $1,100.00 + (12% * Income over $11,000)
22%	$41,776 – $89,075 $4,807.50 + (22% * Income over $41,775)	$44,726 – $95,375 $5,147.00 + (22% * Income over $44,725)
24%	$89,076 – $170,050 $15,213.50 + (24% * Income over $89,075)	$95,376 – $182,100 $16,290.00 + (24% * Income over $95,375)
32%	$170,051 – $215,950 $34,647.50 + (32% * Income over $170,050)	$182,101 – $231,250 $37,104.00 + (32% * Income over $182,100)
35%	$215,951 – $323,925 $49,335.50 + (35% * Income over $215,950)	$231,251 – $346,875 $52,832.00 + (35% * Income over $231,250)
37%	$323,926+ $87,126.75 + (37% * Income over $323,925)	$578,126+ $93,300.75 + (37% * Income over $346,875)

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Head of Household

Tax Rate	Head of Household (2022)	Head of Household (2023)
10%	$0 – $14,650 10% of Taxable Income	$0 – $15,700 10% of Taxable Income
12%	$14,651 – $55,900 $1,465.00 + (12% * Income over $10,275)	$15,701 – $59,850 $1,570.00 + (12% * Income over $11,000)
22%	$55,901 – $89,050 $6,415.00 + (22% * Income over $41,775)	$59,851 – $95,350 $6,868.00 + (22% * Income over $44,725)
24%	$89,051 – $170,050 $13,708.00 + (24% * Income over $89,075)	$95,351 – $182,100 $14,678.00 + (24% * Income over $95,375)
32%	$170,051 – $215,950 $33,148.00 + (32% * Income over $170,050)	$182,101 – $231,250 $35,498.00 + (32% * Income over $182,100)
35%	$215,951 – $539,900 $47,836.00 + (35% * Income over $215,950)	$231,251 – $578,100 $51,226.00 + (35% * Income over $231,250)
37%	$539,901+ $161,218.50 + (37% * Income over $539,900)	$578,101+ $172,623.50 + (37% * Income over $578,125)

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