Tax-Filing in 2022: What’s My Tax Bracket?

An unexpected bonus, income from a side gig or a life change like retirement or marriage may have landed you in a new tax bracket this year. Determining your tax bracket, however, is complex, and the income cutoffs for each tax rate typically change each year.

Here are the 2021 income tax brackets for federal taxes due in April 2022:

Explore the 2021 Income Tax Brackets

A taxpayer’s bracket is based on his or her taxable income earned in 2021. This year’s taxable income ranges are increased slightly over 2020, while the tax rates remain unchanged.

Rate Single Married Filing Jointly Head of Household
10% Up to $9,950 Up to $19,900 Up to $14,200
12% $9,951 to $40,525 $19,901 to $81,050 $14,201 to $54,200
22% $40,526 to $86,375 $81,051 to $172,750 $54,201 to $86,350
24% $86,376 to $164,925 $172,751 to $329,850 $86,351 to $164,900
32% $164,926 to $209,425 $329,851 to $418,850 $164,901 to $209,400
35% $209,426 to $523,600 $418,851 to $628,300 $209,401 to $523,600
37% $523,601 or more $628,301 or more $523,601 or more

How Tax Brackets Work

The federal income tax bracket determines a taxpayer’s tax rate. There are seven tax rates for the 2021 tax season: 10%, 12%, 22%, 24%, 32%, 35% and 37%. Filing status, amount of taxable income and the difference between marginal and effective tax rates determine a taxpayer’s federal income tax rate.

The progressive federal tax system in the U.S. requires filers with higher incomes to pay higher tax rates, but taxpayers don’t pay the same rate on every dollar earned. For example, a taxpayer with $35,000 in taxable income and filing single would fall in the 12% bracket — but only pay 10% on the first $9,950 and 12% on the rest.

[Read: How Remote Work Could Affect Your Income Tax.]

Identify Your Filing Status

Your filing status is one element that determines your tax bracket and, ultimately, your tax liability.

Common filing statuses include:

— Single: Unmarried or divorced taxpayers not claimed as a dependent on another person’s return.

— Married filing jointly: Couples married by Dec. 31, 2021, have the option to file jointly.

— Married filing separately: Couples married by Dec. 31, 2021, have the option to file separately.

— Head of household: Unmarried or divorced taxpayers who have a qualifying child or dependent and pay more than half of the costs of running the household where the qualifying child or dependent resided for at least half the year.

Married taxpayers have the choice to file jointly or separately, but some aspects of their returns will be connected regardless of their filing status. Couples who choose to file jointly may find themselves in a lower tax bracket than if they had filed separately.

[Read: Married Couples: Should You File Jointly or Separately?]

How to Calculate Your Taxable Income

Though not a simple process, these are the three steps to calculating your taxable income:

1. Calculate your gross income by adding up earnings.

2. Calculate your adjusted gross income by subtracting tax adjustments.

3. Calculate your taxable income by subtracting deductions.

First, add up all of your 2021 earnings, including those from full-time employment, part-time employment, freelance work, income from rental properties and other sources. Then subtract any income that is considered an exclusion by the tax code, such as proceeds from a life insurance policy to determine your gross income.

Next, subtract any adjustments from your gross income. Adjustments might include contributions to a traditional IRA, student loan interest payments and health savings account contributions. This amount you arrive at is your adjusted gross income.

Finally, subtract any deductions from your adjusted gross income to determine your taxable income. Filers can take the standard deduction of $12,550 for single filers or $18,800 for heads of households and joint filers, or itemize deductions. This is your taxable income and the amount you can use to determine your tax bracket — though keep in mind that investment income is taxed at a separate capital gains rate.

“Take your gross income and subtract adjustments and deductions like alimony, half of your self-employment taxes, if you’re a teacher you get the teacher’s education deduction, the student loan interest deduction,” says Lisa Greene-Lewis, certified public accountant and tax expert at TurboTax. “Those expenses reduce your gross income and get you to your adjusted gross income and taxable income.”

[Read: Tax Write-Offs You Shouldn’t Overlook.]

Understand the Marginal Tax Rate vs. Effective Tax Rate

Your marginal tax rate is the rate you see listed on the federal income tax bracket. So, for example, individuals with a taxable income of $55,000 will have a marginal tax rate of 22%. But this rate isn’t applied to all of your taxable income.

Instead, in this example, the marginal tax rate is only applied to taxable income above $40,525 in 2021 and your effective tax rate looks like this:

10% x $9,950 = $995

12% x ($40,525 – $9,950) = $3,669

22% x ($55,000 – $40,525) = $3,184.50

In this example, the total tax liability for an individual with $55,000 in taxable income is $7,848.50, resulting in an effective tax rate of about 14%.

The 2020 Income Tax Brackets

Here’s a look at the 2020 tax brackets (taxes filed by May 2020):

Rate Single Married Filing Jointly Head of Household
10% Up to $9,875 Up to $19,750 Up to $14,100
12% $9,876 to $40,125 $19,751 to $80,250 $14,101 to $53,700
22% $40,126 to $85,525 $80,251 to $171,050 $53,701 to $85,500
24% $85,526 to $163,300 $171,051 to $326,600 $85,501 to $163,300
32% $163,301 to $207,350 $326,601 to $414,700 $163,301 to $207,350
35% $207,351 to $518,400 $414,701 to $622,050 $207,351 to $518,400
37% Over $518,400 Over $622,050 Over $518,400

The 2019 Income Tax Brackets

Here’s a look at the 2019 tax brackets (taxes filed by April 2019):

Rate Single Married Filing Jointly Head of Household
10% $0 to $9,700 $0 to $19,400 $0 to $13,850
12% $9,701 to $39,475 $19,401 to $78,950 $13,851 to $52,850
22% $39,476 to $84,200 $78,951 to $168,400 $52,851 to $84,200
24% $84,201 to $160,725 $168,401 to $321,450 $84,201 to $160,700
32% $160,726 to $204,100 $321,451 to $408,200 $160,701 to $204,100
35% $204,101 to $510,300 $408,201 to $612,350 $204,101 to $510,300
37% More than $510,300 More than $612,350 More than $510,300

Ways to Lower Your Tax Rate

Knowing your tax bracket can help you legally reduce your tax liability. If your taxable income falls right on the cusp of two tax brackets, there are a few options for lowering your tax liability by keeping yourself in that lower bracket.

Two common strategies for keeping inside a lower tax bracket are delaying income and making contributions to accounts like a health savings account or retirement funds. These strategies can reduce a taxpayer’s taxable income, possibly allowing him or her to maintain a lower rate.

“If a taxpayer is in a situation where they have the ability to recognize or not recognize some income in a certain year — such as year-end bonuses, when a company might give you the option to have that bonus paid out the week of Christmas or in early January — knowing where you fall within your tax bracket and how much room there is before that tax bracket is reached could weigh in on your decision,” says Martin Kamenski, CEO of Revel CPA, says.

But to most taxpayers, he says, “Don’t sweat your tax bracket too much.”

More from U.S. News

12 Tax Deductions That Have Disappeared

10 Tax Breaks for People Over 50

Should You Be Making Quarterly Tax Payments?

Tax-Filing in 2022: What’s My Tax Bracket? originally appeared on usnews.com

Update 10/28/21: This story was published at an earlier date and has been updated with new information.

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