The US uses a progressive tax system under which the more you make, the more you pay. But how much you pay depends on your tax filing status. And every year, the IRS tweaks its tax brackets to adjust for inflation.
Use the charts below to see how much you’ll owe for the 2023 tax year, due Monday, April 15, 2024, and explore top tips for reducing your tax bill.
Contrary to popular belief, being in a tax bracket doesn’t mean you pay a flat percentage on your total income. The federal government breaks your income into chunks, and you pay a marginal tax rate for each chunk. That means different parts of your income gets taxed a different rate.
For example, if you’re a single tax filer who made $60,000 in 2023, you’ll pay a 10% tax on the first $11,000 you made, 12% of the amount ranging from $11,001 to $47,150 and 22% on the remaining income up to $60,000 when you file in 2024.
Tax rate
Tax bracket
Taxes owed
10%
$0 to $11,000
$1,100
12%
$11,001 to $47,150
$4,337.88
22%
$47,151 to $60,000
$2,826.78
24%
Not applicable
32%
Not applicable
35%
Not applicable
37%
Not applicable
Total taxes owed
$8,264.66
Your marginal tax rate is the highest tax rate applied to your income, whereas your effective tax rate is the overall percentage of your income that goes to taxes. So, while your marginal tax rate is 22%, you didn’t pay 22% in taxes on your entire income. Instead, your effective tax rate is about 14% ($8,264 / $60,000).
Recent changes to tax brackets
Each year, the taxable income limits increase slightly due to inflation. But the tax rates themselves usually stay the same — unless there’s a tax reform, like the Tax Cuts and Jobs Act that passed in 2018.
The act lowered the federal income tax rates and increased the income thresholds within each bracket. Now, the highest earners are taxed at a 37% rate instead of a 39.6% rate, and you can generally earn more income before you’re pushed into a higher bracket.
State tax brackets
States have the freedom to structure their tax brackets however they want. Some states offer a progressive tax rate, where the more you make, the more you pay. Others have a flat tax rate, and a few don’t have income tax at all.
States with no income tax:
Alaska
Florida
New Hampshire
Nevada
South Dakota
Tennessee
Texas
Washington
Wyoming
States with a flat-rate tax:
Arizona
Colorado
Idaho
Illinois
Indiana
Kentucky
Massachusetts
Michigan
Mississippi
North Carolina
Pennsylvania
Utah
States with progressive tax rates:
Alabama
Arkansas
California
Connecticut
Delaware
Georgia
Hawaii
Iowa
Kansas
Louisiana
Maine
Maryland
Minnesota
Missouri
Montana
Nebraska
New Jersey
New Mexico
New York
North Dakota
Ohio
Oklahoma
Oregon
Rhode Island
South Carolina
Vermont
Virginia
Washington, DC
West Virginia
Wisconsin
How to lower your tax bracket
You can minimize the taxes you pay through credits, deductions and tax-deferred savings contributions.
Tax credits
Tax credits lower your tax bill dollar-for-dollar. If you have a $3,000 tax bill but qualify for $1,000 in credits, your bill is reduced to $2,000.
Common tax credits include:
Child tax credit
Earned income tax credit
American opportunity tax credit (education credit)
Electric car tax credit
Saver’s credit
Tax deductions
Tax deductions lower your taxable income dollar-for-dollar, which could drop you into a lower tax bracket. Common items you can write off on your taxes include charitable contributions, medical expenses, mortgage interest, property taxes, states and local income taxes, business expenses and more.
Want to calculate how much a deduction will save you in taxes? Use your highest income tax bracket as a guide. For example, if your highest tax bracket is 24%, a $1,000 deduction may trim $240 off your tax bill.
Anytime you save money in a taxed-deferred retirement or health savings account, it lowers your taxable income. So, one of the easiest ways to reduce your taxable income is to max out your retirement accounts. For example, if you make $60,000 a year and contribute $19,500 to your 401(k), your taxable income drops to $40,500.
The same goes for HSAs. If you have a high-deductible healthcare plan, open a health savings plan and contribute as much as you can. For the 2023 tax year, the maximum limit is $3,850 for individual plans and $7,750 for family plans. For 2024, individuals can contribute up to $4,150, and families can contribute up to $8,300.
Bottom line
The way our current federal tax system is set up, the more income you earn, the more you pay in taxes. But just because you’re in one tax bracket doesn’t mean all your income is taxed at that rate. Instead, your income is broken up into chunks, and you pay a different rate for each one.
Regardless of which bracket you fall in, there are proven ways you can lower your tax bill each year thanks to deductions and credits. Wondering which tax deductions you may qualify for? Check out our guide on income tax deductions.
Cassidy Horton is a freelance personal finance copywriter and past contributing writer for Finder. Her writing and banking expertise have been featured in Forbes Advisor, Money, The Balance, Money Under 30, Insure.com, and other top digital publishers. She holds a BS in public relations and an MBA from Georgia Southern University.
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