Understanding Marginal Income Tax Brackets
Tax WorksSeeing how marginal income tax brackets work is helpful because it shows the progressive nature of income taxes. It also helps you visualize how your total tax rate can be calculated. But remember, this material is not intended as tax or legal advice. Please consult a tax professional for specific information regarding your individual situation.
How Federal Income Tax Brackets WorkSay a married couple, filing jointly for the 2022 tax year, had a taxable income of $200,000. Each dollar over $178,150 – or $21,850 – would fall into the 24% federal income tax bracket. However, the couple’s total federal tax would be $35,671 – about 18% of their adjusted gross income. This is a hypothetical example used for illustrative purposes only. It assumes no tax credits apply.
2022 Federal Income Tax BracketsYour federal income tax bracket is determined by two factors: your total income and your tax-filing classification. For the 2022 tax year, there are seven tax brackets for ordinary income – ranging from 10% to 37% – and four classifications: single, married filing jointly, married filing separately, and head of household.3
1. Investopedia.com, 2021
2. IRS.gov, 2022
3. IRS.gov, 2022
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Dr. Jason Van Duyn
AQuest Wealth Strategies
Dr. Jason Van Duyn CFP®, ChFC, CLU, MBA is a Registered Representative with and Securities and Advisory Services offered through LPL Financial, a Registered Investment Advisor. Member FINRA & SIPC. The LPL Financial registered representative associated with this site may only discuss and/or transact securities business with residents of the following states: IN, IL, TX, MI, NC, AZ, VA, FL, OH and CO.