Tax season is no fun! But if you earn an income during the financial year, you’ll need to pay your taxes. If you’ve had trouble gathering tax documents or have been hit with a huge tax bill in the past, it can help to be prepared. And the best way to do this is by knowing what tax bracket you come under. At present, in the United States, there are a total of seven tax brackets. But people who are in higher tax brackets don’t have to pay the corresponding tax rate on their entire income. In the American tax system, income tax rates are graduated. This means you pay varied rates on different amounts of taxable income.
2022 Tax Brackets
- 37% tax rate for incomes over $539,900 (income increases to $647,850 for married couples who file jointly)
- 35% tax rate for incomes over $215,950 (income increases to $431,900 for married couples who file jointly)
- 32% tax rate for incomes over $170,050 (income increases to $340,100 for married couples who file jointly)
- 24% tax rate for incomes over $89,075 (income increases to $178,150 for married couples who file jointly)
- 22% tax rate for incomes over $41,775 (income increases to $83,550 for married couples who file jointly)
- 12% tax rate for incomes over $10,275 (income increases to $20,550 for married couples who file jointly)
- 10% tax rate for incomes of $10,275 or less (income increases to $20,550 for married couples who file jointly)
2021 Tax Brackets
- 37% tax rate for incomes over $523,600 (income increased to $628,300 for married couples who file jointly)
- 35% tax rate for incomes over $209,425 (income increased to $418,850 for married couples who file jointly)
- 32% tax rate for incomes over $164,925 (income increased to $329,850 for married couples who file jointly)
- 24% tax rate for incomes over $86,375 (income increased to $172,750 for married couples who file jointly)
- 22% tax rate for incomes over $40,525 (income increased to $81,050 for married couples who file jointly)
- 12% tax rate for incomes over $9,950 (income increased to $19,900 for married couples who file jointly)
- 10% tax rate for incomes up to $9,950 (income increased to $19,900 for married couples who file jointly)
How to reduce your tax bill in 2022
If you got hit with a huge tax bill in 2021, speak to a tax advisor who can suggest ways to reduce that for the current year. Before you do this, look at your paycheck to know how much tax is being deducted. If the withholding is less, it makes sense to have more money taken out of your paycheck than deal with a huge tax bill at the end of the year. You can use the Internal Revenue Service’s withholding calculator to determine how much tax should be withheld from each of your paychecks.
