What Are Income Tax Brackets and How Do They Work?

In America, the government decides how much tax you owe by dividing your taxable income into chunks – or “brackets” – and taxing each chunk at a different rate. Here’s a look at the current tax brackets and how our system of progressive income taxation works. 

What are tax brackets? 

A tax bracket describes a tax rate (percentage) and a range of income that gets taxed at that rate. There are currently seven federal income tax brackets. * 

*State tax laws vary. Each state has its own set of income tax brackets and rates. To learn about how income taxes work in your state, click here. 

What are the current income tax brackets? 

The income tax brackets for tax year 2021 (returns that are filed in 2022) are as follows: 

Single Filers  

Taxable income between:  Taxes due:  
$0-$9,950  10% of taxable income  
$9,951-$40,525  $995 + 12% of the amount over $9,950  
$40,526-$86,375 $4,664 + 22% of the amount over $40,525   
$86,376-$164,925  $14,751 + 24% of the amount over $86,375  
$164,926-$209,425  $33,603 + 32% of the amount over $164,925   
$209,426-$523,600 $47,843 + 35% of the amount over $209,425   
$523,601+  $157,804.25+ 37% of the amount over $523,600   

Married Filing Separately  

Taxable income between:  Taxes due:  
$0-$9,950    10% of taxable income   
$9,951-$40,525      $995 + 12% of the amount over $9,950      
$40,526-$86,375     $4,664 + 22% of the amount over $40,525      
$86,376-$164,925      $14,751 + 24% of the amount over $85,525      
$164,925-$209,425    $33,603 + 32% of the amount over $164,925      
$209,426-$314,150     $47,843 + 35% of the amount over $209,425     
$314,151+   $84,496.75 + 37% of the amount over $314,150   

Married Filing Jointly (and Qualifying Widow/ers with Dependent)  

Taxable income between:  Taxes due:  
$0 to $19,900  10% of taxable income  
$19,901 to $81,050  $1,990 plus 12% of the amount over $19,900  
$81,051 to $172,750  $9,328 plus 22% of the amount over $81,050  
$172,751 to $329,850  $29,502 plus 24% of the amount over $172,750  
$329,601 to $414,700  $67,206 plus 32% of the amount over $329,850  
$418,851 to $628,300  $95,686 plus 35% of the amount over $418,850  
$628,301+  $168,993.50 plus 37% of the amount over $628,300  

Head of Household  

Taxable income between:  Taxes due:  
$0 to $14,200  10% of taxable income  
$14,201 to $54,200  $1,420 plus 12% of the amount over $14,200  
$54,201 to $86,350  $6,220 plus 22% of the amount over $54,200  
$86,351 to $164,900  $13,293 plus 24% of the amount over $86,350  
$164,901 to $209,400  $32,145 plus 32% of the amount over $164,900  
$209,401 to $523,600  $46,385 plus 35% of the amount over $209,400  
$523,601+  $156,355 plus 37% of the amount over $523,600 

What is progressive income taxation? 

With progressive taxation, each tax rate only applies to the chunk of income that falls in that bracket. What this means is, depending on how much you earn, your entire income may not be taxed at the same rate. As you earn more money, you could move into a new, higher tax bracket — but only a portion of your income is taxed at the higher rate. Even taxpayers in the highest bracket have some income taxed at each of the lower rates.  

Here’s an example:  

A single filer with $25,000 in taxable income falls into the 12% percent bracket. However, they do not pay 12% percent of the first $9,950. Instead, they pay 10% of 9,950 plus 12% of the remaining $15,050. This will give them their total federal income tax of roughly $2,801. 

What is taxable income? 

Taxable income can include: 

  • Wages 
  • Your salary 
  • Bonuses 
  • Tips 
  • Investment income 
  • Unearned income 

This combination of all income you received during the year is used by the IRS to calculate how much you owe for taxes. It is also known as adjusted gross income, or the income you receive minus any tax deductions or exemptions. 

For more information about taxable income, read also Do I Make Enough to Pay Taxes? 

How often do income tax brackets change? 

The IRS bumps up the income range in the individual income tax brackets every year to account for inflation. But the rates for each bracket typically do not change unless there is a change in the tax code. The most recent change to the income tax rates occurred in 2018, after the Tax Cuts and Jobs Act was signed into law. 

The information in this article is up to date for tax year 2021 (returns filed in 2022).