Learn about the US income tax system and figure out how your taxes are calculated.
Income taxes are based on how much money we earn at our job(s) and are usually taken out of our pay before we receive it. In other words, most income tax is collected directly from our employer, so it is removed from our paychecks rather than receiving it and owing it later.
Income tax can be collected by state or local governments and is always collected, or levied, by the US federal government.
We pay a percentage of our income based on how much we make, if we are married or single and if we have any dependents like children.
The tax system brackets our income into levels, so the rate on the first dollars earned stays the same but the more we earn, the higher the additional income is taxed. We know this is complicated, but please bear with us.
Federal tax rates for single individuals without dependents:
| Taxable Income Earned 2023 | Taxable Income Earned 2024 | Tax Rate |
| $0 to $11,000 | $0 to $11,600 | 10% |
| $11,001 to $44,725 | $11,601 to $47,150 | 12% |
| $44,726 to $95,375 | $47,151 to $100,525 | 22% |
| $95,376 to $182,100 | $100,526 to $191,950 | 24% |
| $182,101 to $231,250 | $191,951 to $243,725 | 32% |
| $231,251 to $578,125 | $243,726 to $609,350 | 35% |
| $578,126 and up | $609,351 and up | 37% |
The examples below are estimates. Please use a tax calculator for exact calculation of the income tax you owe.
Let’s say I made $35,000 in taxable income in 2023, am single and have no kids.
I pay 10% tax on $11,000 and 12% tax on the remaining $24,000.
$11,000 x 10% = $1,100
$35,000 – $11,000 = $24,000 $24,000 x 12% = $2,880
$1,100 + $2,880 = $3,980
(Google allows you to multiply by %, but if you need to use another program, multiply by .10 or .12 instead of 10% and 12%.)
If my taxable income was $50,000, I would pay 10% tax on $11,000; 12% tax on the next $33,724; and 22% on the last $5,275.
If I got a $2,000 raise in the first example, I would pay a 12% tax on that money; but if I got at $2,000 raise in the second example, I would pay a 22% tax on that income.
If I suddenly made over $95,376 in taxable income, that money would be taxed at a 24% rate.
Income is bracketed into levels, so the rate on the first dollars earned stays the same but the more you earn, the higher the additional income is taxed.
The same idea applies for people who are married and file together, but the levels at which the tax rate increase are higher.
Federal tax rates for married couples filing together:
| Taxable Income Earned 2023 | Taxable Income Earned 2024 | Tax Rate |
| Up to $22,000 | $0 to $23,200 | 10% |
| $22,001 to $89,450 | $23,201 to $94,300 | 12% |
| $89,451 to $190,750 | $94,301 to $201,050 | 22% |
| $190,751 to $364,200 | $201,051 to $383,900 | 24% |
| $364,201 to $462,500 | $383,901 to $487,450 | 32% |
| $462,501 to $693,750 | $487,451 to $731,200 | 35% |
| $693,751 and up | $731,201 and up | 37% |
If my (imaginary) spouse and I made a combined $180,000 in taxable income in 2023 and filed our taxes together, we would have paid 10% on the first $23,200; 12% on the next $71,099, 22% on $85,699.
There are four categories total: single, married filing jointly (or qualified widower), head of household and married filing separately. Unsure of which you are, this income tax calculator breaks down the options.
Tax calculators, like the one below, can help fill in the details for you. But I wanted to give you a good understanding of how the tax brackets and rate system works.
Please note that this article and the main video focus on the bracketing system and not how taxable income is calculated.
There are many tax deductions, like giving to charity, that lower the amount of your income that is considered taxable. Many people opt to take the standard tax deduction, but this is not universal, so we didn’t want to assume that.
To see how changes in income and life situations could
affect your taxes, check out this income tax calculator.
We updated this video in April 2022. You can still find the original video here.