The IRS has released new tax brackets for 2024 and there’s good news. The brackets have increased again, meaning that you’ll have to make more before the amount you owe progressively jumps up. Below we’ll cover what the new tax brackets are and why the tax bracket you’re in isn’t the percent of your income that you’ll actually owe in tax.
2024 tax brackets
If you’re single (known as an individual filer), your brackets are:
10 percent: Up to $11,600
12 percent: $11,601 to $47,150
22 percent: $47,151 to $100,525
24 percent: $100,526 to $191,950
32 percent: $191,951 to $243,725
35 percent: $243,726 to $578,125
37 percent: Over $609,350
People who are married but file separately (known as married filing separately) have the same tax brackets as individual filers do until the top two. Those amounts are:
35 percent: $243,726 to $365,600
37 percent: Over $365,600
If you are married and file a single tax return as a couple (known as married filing jointly), your brackets are:
10 percent: Up to $23,200
12 percent: $23,201 to $94,300
22 percent: $94,301 to $201,050
24 percent: $201,051 to $383,900
32 percent: $383,901 to $487,450
35 percent: $487,451 to $731,200
37 percent: Over $731,200
If you are unmarried, pay for more than half your household’s expenses and have a dependent (known as head of household), your brackets are:
10 percent: Up to $16,550
12 percent: $16,551 to $63,100
22 percent: $63,101 to $100,500
24 percent: $100,501 to $191,950
32 percent: $191,951 to $243,700
35 percent: $243,701 to $609,350
37 percent: Over $608,350
Calculating your marginal tax bracket vs. your effective tax rate
What you owe in taxes is the income on your W-2 form multiplied by your tax bracket percentage, right? Unfortunately, it’s not that simple.
For starters, the income on your W-2 isn’t likely to be the amount that is actually taxed. That’s because when you file, you’re probably going to take deductions that will lower your taxable income. You may choose to take the standard deduction (which is $14,600, or $29,200 if you’re filing jointly) or a host of other deductions you choose to itemize on your tax return. Your 1040 form helps you determine what your taxable income will be.
Second, the U.S. income tax system is a progressive tax, not a flat tax. That means as your income rises, so does the percentage that you pay in taxes—and your income is actually taxed in chunks at graduated rates that follow the steps of the tax brackets.
Here’s a simple example of what we mean. Let’s say you’re single, and after deductions, your taxable income is $60,000, which lands you in the 22 percent tax bracket. You won’t be paying 22 percent on all $60,000 (which would be $13,200 in federal tax). Rather …
• The first $11,600 will be taxed at 10 percent, which is $1,160.
• The income between $11,601 and $47,150 (or $35,550) will be taxed at 12 percent, or about $4,266.
• The income between $47,150 and $60,000 (or $12,850) will be taxed at 22 percent, or about $2,827.
So in this example, your total 2023 federal income tax owed would be $8,253, substantially less than the $13,200 you would have owed if you paid a flat 22 percent on your entire taxable income.
Your marginal tax bracket is the tax rate you paid on your last dollar of income and is how you determine which tax bracket you’re in. Your effective tax rate, meanwhile, is the percentage of your income that you paid in taxes after all was said and done—in this case, a little less than 14 percent ($8,253/$60,000).
Changing tax brackets
Of course, your tax bracket and effective tax rate aren’t something that you figure out once and then never again. For instance, if you got a raise in the last year, it could push you into the next higher tax bracket (that’s why the tax brackets also increase over time). On the flip side, if your income drops or you become eligible to take more deductions, you could fall into a lower tax bracket. So make sure you check each year to see what the new tax brackets are and how that could impact the amount you will pay.
This publication is not intended as legal or tax advice. Consult with a tax professional for tax advice specific to your situation.
