Federal income tax brackets 2024: what do I need to know
Explore the federal income tax brackets to determine your tax liability for the 2024/25 tax year.
Summary
The 2024 federal income tax brackets feature seven tax rates ranging from 10% to 37%.
Understanding marginal tax rates helps in determining how each portion of income is taxed at its respective bracket rate under the federal tax system.
Federal income tax brackets are adjusted annually for inflation to prevent "bracket creep" and ensure tax fairness.
A financial advisor can help you develop the right tax strategy to ensure you’re keeping more of your hard-earned money.
What are federal income tax brackets?
Federal income tax brackets are thresholds legislated by the government to determine how much tax individuals owe based on their taxable income.
Essentially, these brackets divide taxpayers into groups based on income levels, with each group taxed at progressively higher rates as income increases. This means that as your income rises, you may move into a higher federal income tax bracket, resulting in a higher percentage of your income being taxed.
What are the federal tax brackets?
The seven 2024 federal income tax bracket rates range from 10% to 37%. These tax brackets pertain to income earned during the current year, which taxpayers will report on their tax returns due in 2025.
Here’s a breakdown of the 2024 tax brackets. These brackets vary depending on your filing status:
| Tax rate | Single | Married filing jointly | Married filing separately | Head of household |
|---|---|---|---|---|
| Tax rate | Single | Married filing jointly | Married filing separately | Head of household |
| 10% | $0 to $11,600 | $0 to $23,200 | $0 to $11,600 | $0 to $16,550 |
| 12% | $11,601 to $47,150 | $23,201 to $94,300 | $11,601 to $47,150 | $16,551 to $63,100 |
| 22% | $47,151 to $100,525 | $94,301 to $201,050 | $47,151 to $100,525 | $63,101 to $100,500 |
| 24% | $100,526 to $191,950 | $201,051 to $383,900 | $100,526 to $191,950 | $100,501 to $191,950 |
| 32% | $191,951 to $243,725 | $383,901 to $487,450 | $191,951 to $243,725 | $191,951 to $243,700 |
| 35% | $243,726 to $609,350 | $487,451 to $731,200 | $243,726 to $365,600 | $243,701 to $609,350 |
| 37% | $609,351 or more | $731,201 or more | $365,601 or more | $609,350 or more |
How do federal income tax brackets work?
Federal income tax brackets operate on a marginal tax rate system.
This means that as your income increases, each additional dollar you earn may be taxed at a higher rate within each bracket.
For example, if you are a single filer with a taxable income of $110,000 in 2024:
You would pay 10% on the first $11,600:
($11,600 X 10% = $1,160)
12% on the income between $11,601 and $47,150:
($35,549 X 12% = $4,265.88)
22% on the income between $47,151 and $100,525:
($53,374 X 22% = $11,722.28)
24% on the remaining income above $100,525:
($9,474 X 24% = $2,268.96)
Therefore, for a single filer with a taxable income of $110,000 in 2024, the federal income tax owed would be $19,417.12.
How do I determine my federal tax bracket?
Knowing how to determine your federal tax bracket involves understanding your filing status and taxable income.
Let's delve deeper into each filing type:
Single: This filing status applies to individuals who are not married or are legally separated according to state law by the last day of the tax year.
Married filing jointly: Married couples can choose to file a joint tax return, combining their incomes and deductions. This status often results in lower taxes compared to filing separately, as it allows for more advantageous tax brackets and deductions.
Married filing separately: Married couples who choose to file separate tax returns report their own incomes and deductions independently from each other. This status may be beneficial in certain situations, such as when one spouse has significant medical expenses or miscellaneous itemized deductions.
Head of household: This filing status is for unmarried individuals who provide a home for qualifying dependents. To qualify as head of household, you must be unmarried or considered unmarried on the last day of the year, pay more than half the cost of keeping up a home for the year, and have a qualifying dependent living with you for more than half the year.
Here’s an example:
Emma is filing as head of household for the 2024 tax year. She has a taxable income of $110,000:
Emma would pay 10% on the first $16,550:
($16,550 X 10% = $1,655)
12% on income between $16,551 and $63,100:
($46,549 X 12% = $5,574.88)
22% on income between $63,101 and $100,500:
($37,399 X 22% = $8,227.78)
24% on the remaining income above $100, 500:
($9,499 X 24% = $2,279.76)
Therefore, for the 2024 tax year, Emma, filing as head of household with a taxable income of $110,000, falls into the 24% tax bracket and owes $17,737.42 in federal income tax.
Are federal tax brackets based on adjusted income?
Yes, federal income tax brackets are adjusted annually to account for inflation.
This means that the income thresholds for each bracket may change slightly each year to reflect the current economic conditions and cost of living.
Bracket adjustments serve to mitigate "bracket creep," where taxpayers might inadvertently move into higher tax brackets as their income rises with inflation.
Additionally, these adjustments can reduce taxes for individuals whose income has not kept pace with inflation.
Do federal tax brackets differ by state?
Tax brackets for federal income tax brackets are consistent across all states within the United States.
This means that the federal government calculates your federal income tax liability using the same tax rates and brackets regardless of where you live.
While federal tax rates are uniform, state income tax rates can vary widely.
The combination of federal and state income tax brackets can significantly impact your total tax liability.
For instance, someone living in California will face different state income tax rates than someone residing in Texas. California has a progressive state income tax system with rates ranging from 1% to 12.3%, depending on income level, while Texas does not impose a state income tax on individuals.
Do federal tax brackets include Social Security and Medicare?
Federal income tax brackets determine income tax on wages, investments, and business income but not on Social Security benefits directly. However, up to 85% of Social Security benefits can become taxable based on income thresholds when your Social Security income is combined with your other income.
Medicare taxes, separate from income tax, are withheld from paychecks to fund health insurance for individuals aged 65 and older.
Understanding how Social Security benefits may impact your overall tax liability requires careful consideration of both federal income tax brackets and the specific rules governing Social Security taxation.
For detailed calculations and further guidance, taxpayers can refer to IRS Publication 915 or consult with a tax professional.
Get expert financial advice
Understanding federal income tax brackets and the current ones is essential for effective tax planning. These brackets, legislated by the government, ensure that taxpayers are taxed progressively as their income increases.
By knowing which bracket applies to your filing status and income level, you can better manage your tax liabilities and make informed financial decisions.
Let Unbiased connect you with a financial advisor for expert financial advice tailored to navigating federal income tax brackets and optimizing your tax strategy.
Senior Content Writer
Rachel is a Senior Content Writer at Unbiased. She has nearly a decade of experience writing and producing content across a range of different sectors.