The Internal Revenue Service (IRS) has released 2023 inflation adjustments for federal income tax brackets, the standard deduction, and other parts of the tax code. These inflation adjustments will be in effect for income earned in 2023, which taxpayers will file a return for in 2024.
Below, for comparison, are tax brackets and the standard deduction for income earned in 2022, which taxpayers will file with the IRS in 2023, and for income earned in 2023, which taxpayers will file with the IRS in 2024. Income tax brackets and the standard deduction are moving up around seven percent to account for high inflation.
Income Tax Brackets for Single Taxpayers, 2022-2023 | ||||
2022 Income (2023 Filing Season, due April 17, 2023) | 2023 Income (2024 Filing Season, due April 15, 2024) | Income Difference for Top of Bracket, 2023 vs. 2022 | ||
Income | Tax | Income | Tax | Difference |
$0-$10,275 | 10% of income | $0-$11,000 | 10% of income | +$725 (+7.1%) |
$10,275-$41,775 | $1,027.50 + 12% of income over $10,275 | $11,000-$44,725 | $1,100 + 12% of income over $11,000 | +$2,950 (+7.1%) |
$41,775-$89,075 | $4,807.50 + 22% of income over $41,775 | $44,725-$95,375 | $5,147 + 22% of income over $44,725 | +$6,300 (+7.1%) |
$89,075-$170,050 | $15,213.50 + 24% of income over $89,075 | $95,375-$182,100 | $16,290 + 24% of income over $95,375 | +$12,050 (+7.1%) |
$170,050-$215,950 | $34,647.50 + 32% of income over $170,050 | $182,100-$231,250 | $37,104 + 32% of income over $182,100 | +$15,300 (+7.1%) |
$215,950-$539,900 | $49,335.50 + 35% of income over $215,950 | $231,250-$578,125 | $52,832 + 35% of income over $231,250 | +$38,225 (+7.1%) |
$539,900+ | $161,218.50 + 37% of income over $539,900 | $578,125+ | $174,238.25 + 37% of income over $578,125 | N/A |
Standard Deduction for Single Taxpayers, 2022-2023 | ||
2022 Income (2023 Filing Season) | 2023 Income (2024 Filing Season) | Difference, 2023 vs. 2022 |
$12,950 | $13,850 | +$900 (+6.9%) |
Income Tax Brackets for Married Taxpayers Filing Jointly, 2022-2023 | ||||
2022 Income (2023 Filing Season, due April 17, 2023) | 2023 Income (2024 Filing Season, due April 15, 2024) | Income Difference for Top of Bracket, 2023 vs. 2022 | ||
Income | Tax | Income | Tax | Difference |
$0-$20,550 | 10% of income | $0-$22,000 | 10% of income | +$1,450 (+7.1%) |
$20,550-$83,550 | $2,055 + 12% of income over $20,550 | $22,000-$89,450 | $2,200 + 12% of income over $22,000 | +$5,900 (+7.1%) |
$83,550-$178,150 | $9,615 + 22% of income over $83,550 | $89,450-$190,750 | $10,294 + 22% of income over $89,450 | +$12,600 (+7.1%) |
$178,150-$340,100 | $30,427 + 24% of income over $178,150 | $190,750-$364,200 | $32,580 + 24% of income over $190,750 | +$24,100 (+7.1%) |
$340,100-$431,900 | $69,295 + 32% of income over $340,100 | $364,200-$462,500 | $74,208 + 32% of income over $364,200 | +$30,600 (+7.1%) |
$431,900-$647,850 | $98,671 + 35% of income over $431,900 | $462,500-$693,750 | $105,664 + 35% of income over $462,500 | +$45,900 (+7.1%) |
$647,850+ | $174,253.50 + 37% of income over $647,850 | $693,750+ | $186,601.50 + 37% of income over $693,750 | N/A |
Standard Deduction for Married Taxpayers Filing Jointly, 2022-2023 | ||
2022 Income (2023 Filing Season) | 2023 Income (2024 Filing Season) | Difference, 2023 vs. 2022 |
$25,900 | $27,700 | +$1,800 (+6.9%) |
How to Calculate Federal Tax Liability
A common misconception about federal tax liability and tax “brackets” is that once you enter a certain tax bracket, you pay the rate listed on all your income from dollar zero. This is not the case. Individual income tax rates are marginal. This means that, if you’re an individual earning income in 2023, you will pay a 10-percent rate on the first $11,000 you earn. On your $11,001st dollar, you will start paying a 12-percent rate on each dollar, until you reach the next bracket at $44,725.
Here’s how a sample tax calculation might work for a single adult making $60,000 per year in 2023 and taking the standard deduction:
- Subtract the standard deduction of $13,850 from $60,000 in income, which equals $46,150;
- Identify the tax bracket the taxpayer falls in, the 22-percent bracket;
- Take $5,147 (the amount of taxes the taxpayer owes on their first $44,725 in income);
- And add 22 percent of their remaining income between $44,725 and $46,150 ($1,425 * 0.22, or $313.50);
- For a total tax owed of $5,460.50.
The taxpayer would then reconcile the total tax owed with the amount in taxes they had withheld by their employer. If they had more taxes withheld than what they owe, they would receive a refund. If they owe more taxes than they had withheld, the taxpayer would owe the IRS a payment by April 15, 2024.
For a full review of the 2023 inflation adjustments in the tax code see here.