Overview
This article explains the federal income tax brackets in the United States and how they determine your tax rate. It also mentions the effective tax rate, marginal tax rate, credits and deductions that can reduce your taxable income and lower your federal income tax bracket.
Tax Brackets
There are seven federal income tax brackets, ranging from 10% to 37%. Your tax bracket is determined by your taxable income and filing status. The 2022 and 2023 tax brackets remain unchanged but the thresholds that inform those tax brackets are adjusted annually for inflation.
Effective & Marginal Rates
The percentage of your taxable income you pay in taxes is called effective tax rate, which can be calculated by dividing total taxes owed on Form 1040 by total taxable income. Marginal tax rate refers to the highest federal income tax rate paid on last dollar of taxable income.