Know your tax brackets for 2023

There are seven federal tax brackets for the 2023 tax year: 10%, 12%, 22%, 24%, 32%, 35%, and 37%. Every year the IRS modifies the tax brackets for inflation. Your specific bracket depends on your taxable income and filing status. These are the rates for taxes due in April 2024.

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Marginal tax rate

The marginal tax rate is the highest tax rate you have to pay for every additional dollar of income you earn. A 25% marginal tax rate means you will pay 25 cents for every extra dollar you report on your earnings.

Effective Tax Rate

The effective tax rate is your total tax amount divided by your total earned income.

Single Filers Tax Brackets for 2023

Tax rate	Taxable income bracket	Your taxes
10%	$0 to $11,000	10% of taxable income
12%	$11,000 to $44,725	$1,100 plus 12% of the amount over $11,000
22%	$44,725 to $95,375	$5,147 plus 22% of the amount over $44,725
24%	$95,375 to $182,100	$16,290 plus 24% of the amount over $95,375
32%	$182,100 to $231,250	$37,104 plus 32% of the amount over $182,100
35%	$231,250 to $578,125	$52,832 plus 35% of the amount over $231,250
37%	$578,125 or more	$174,238.25 plus 37% of the amount over $578,125

Married Filing Jointly Tax Brackets for 2023

Tax rate	Taxable income bracket	Your taxes
10%	$0 to $22,000	10% of taxable income
12%	$22,000 to $89,450	$2,200 plus 12% of the amount over $22,000
22%	$89,450 to $190,750	$10,294 plus 22% of the amount over $89,450
24%	$190,750 to $364,200	$32,580 plus 24% of the amount over $190,750
32%	$364,200 to $462,500	$74,208 plus 32% of the amount over $364,200
35%	$462,500 to $693,750	$105,664 plus 35% of the amount over $462,500
37%	$693,750 or more	$186,601.50 plus 37% of the amount over $693,750

Married Filing Separately Tax Brackets for 2023

Tax rate	Taxable income bracket	Your taxes
10%	$0 to $11,000	10% of taxable income
12%	$11,000 to $44,725	$1,100 plus 12% of the amount over $11,000
22%	$44,725 to $95,375	$5,147 plus 22% of the amount over $44,725
24%	$95,375 to $182,100	$16,290 plus 24% of the amount over $95,375
32%	$182,100 to $231,250	$37,104 plus 32% of the amount over $182,100
35%	$215,951 to $346,875	$52,832 plus 35% of the amount over $231,250
37%	$346,875 or more	$93,300.75 plus 37% of the amount over $346,875

Head of Household Tax Brackets for 2023

Tax rate	Taxable income bracket	Your Taxes
10%	$0 to $15,700	10% of taxable income
12%	$15,700 to $59,850	$1,570 plus 12% of the amount over $15,700
22%	$59,850 to $95,350	$6,868 plus 22% of the amount over $59,850
24%	$95,350 to $182,100	$14,678 plus 24% of the amount over $95,350
32%	$182,100 to $231,250	$35,498 plus 32% of the amount over $182,100
35%	$231,250 to $578,100	$51,226 plus 35% of the amount over $231,250
37%	$578,100 or more	$172,623.50 plus 37% of the amount over $578,100

2023 Standard Deduction

The amount of the standard deduction reduces your taxable income. Usually, the IRS adjusts the standard deduction for inflation every year.

You can choose a standard or itemized deduction when you file your taxes. It only makes sense to itemize your deductions if their total value is higher than the standard deduction.

 

Filing Status	Deduction Amount
Single	$13,850
Married Filing Jointly	$27,700
Head of Household	$20,800

Long-term capital gain taxes

You owe a capital gains tax on the profit from selling capital assets such as stocks, options, bonds, real estate, and cryptocurrencies. Long-term capital gains have a more favorable tax treatment than your ordinary taxable income. To qualify for long-term status, you must realize a profit on an investment after holding it for one calendar year or 365 days. Short-term capital gains are taxable as ordinary income.

	Taxable Income Over
Tax Rate	Single	Married Filing Jointly	Head of Household
0%	$0	$0	$0
15%	$44,625	$89,250	$59,750
20%	$492,300	$553,850	$523,050

Net Investment Income tax

A net investment income tax of 3.8% applies to all taxpayers with net investment income above specific threshold amounts. In general, net investment income includes

• Long Term Capital gains
• Short capital gains
• Dividends
• Taxable interest
• Rental and royalty income
• Passive income from investments you don’t actively participate in
• Business income from trading financial instruments or commodities
• The taxable portion of nonqualified annuity payments

You will pay 3.8% of the smaller value between

1. Your total net investment income, or
2. the excess of modified adjusted gross income over the following threshold amounts:

• $200,000 for single and head-of-household filers
• $250,000 for married filing jointly or qualifying widow(er)
• $125,000 for married filing separately

Alternative Minimum Tax Levels for 2023

The AMT exemption amount for 2023 is $81,300 for singles and $126,500 for married couples filing jointly.

In 2023, the 28% AMT rate applies to an excess AMTI of $220,700 for all taxpayers ($110,350 for married couples filing separate returns).

AMT exemptions phase out at 25 cents per dollar earned once AMTI reaches $578,150 for single filers and $1,156,300 for married taxpayers filing jointly.