Disclosure: BestAccountingSoftware is reader-supported. When you buy products through links on our site, we may earn a commission. Learn more.

Tax Brackets Explained (updated for 2024 filing year)

Susan Honea

Susan Honea – 8 years experience helping businesses with bookkeeping, tax preparation and auditing

Last updated: May 21, 2020

Tax brackets can be confusing for everyone. We explain what the tax brackets are, how they work and how to work out which brackets apply to you.

Tax Brackets Explained (updated for 2024 filing year)


Each year in mid-April, the IRS collects a portion of every United States taxpayer’s income. But what determines that portion? How do tax brackets work? And how do factors like marital status, homeownership, or unforeseen injury affect how much a person owes in taxes?

What are Tax Brackets?

The United States has what is called a progressive tax system, where the rate of taxation rises as income rises. A person who makes, say, $20,000 a year will have to pay less than a person who makes $100,000 a year. The percentage of income a person owes to the federal government is determined by the tax bracket the person is in, which is determined by how much money they make.

But it isn’t quite as simple as it may seem.


The first income tax was instituted by Congress with the Revenue Act of 1861, which was a 3% tax on incomes over $800 that was designed to pay for the Union’s expenses during the American Civil War. The following year, with the Revenue Act of 1862, Congress established the office of the Commissioner of Internal Revenue, and the system was modified to include two tax brackets: 3% on incomes up to $10,000 and 5% on incomes over $10,000. This two-bracket model continued until 1872, when income tax was repealed.

In 1913, Congress ratified the Sixteenth Amendment, immediately after which income tax collection began again. At the time, there were still two tax brackets: 1% on incomes ranging from $3,000 to $500,000 and 7% on incomes over $500,000. At the time, the tax code was fairly simple—only about 400 pages. Compare that to modern section 1 of the Internal Revenue Code (26 CFR), which describes the federal income tax regulations and consists of more than 1500 subsections.

The number of tax brackets has varied widely throughout the system’s history. Over the course of the 20th century, the number of tax brackets went as low as two and as high as 78. The percentages owed in those brackets varied widely, too. The percentage owed by the highest bracket has been as high as 91% (during World War II) and as low as 28%, and the percentage owed by the lowest bracket has gone below 6% and as high as 15%.

What are the Tax Brackets for the 2021 filing year?

Today, however, there are only seven tax brackets, and the percentage of income owed based on the bracket a person is in ranges from 10% to 37% (as of October 2020). The percentages are 10%, 12%, 22%, 24%, 32%, 35%, and 37%, increasing as income increases.

Again, it still isn’t quite this simple. Even if a person falls into a certain bracket, they do not have to pay that percentage on all of their taxable income.

Marginal Tax Brackets

A person’s marginal tax bracket is the percentage of income they pay on their highest dollar of income. In other words, this is the highest percentage they will have to pay on any portion of their income. However, they do not pay the marginal rate on their entire income. Tax brackets instead break up income into chunks. For tax year 2020 (returns that will be filed in 2021), for the first $9,875 of income, all taxpayers pay 10%. If a single person only makes $9,875 (or less), then they only pay 10%.

Income Tax % Tax Amount

$  9,875.00 10% $   987.50

However, if that same single person makes, say, $29,700, then they pay 10% on the first $9,9500, 12% on the additional $19,750, and so on.

Income Tax % Tax Amount

$  9,875.00 10% $   987.50

+ $19,825.00 12% $2,379.00

$29,700.00 11.32% (effective) $3,366.50

This means that a person’s effective tax bracket is lower than their marginal one by a small amount, as they do not pay the highest rate on all of their income.

It’s important to note that tax brackets change frequently. The IRS has already announced new tax brackets for 2021 (returns that will be filed in 2022).

How Does Marital Status Affect Income Tax?

In addition to tax brackets affecting how much a person owes, a person’s marital status changes how much they owe. When a person files a tax return with the IRS, they must choose a filing status. There are four filing statuses: single, married filing jointly, married filing separately, and head of household. Technically, there is also a fifth filing status, qualifying widow(er) with dependent child(ren), but it’s identical to married filing jointly, so it’s not recognized as an official status.

In addition to changing the amount that can be deducted, different filing statuses have different thresholds for reaching the different tax brackets. So by combining the four filing statuses with the seven tax brackets, a total of 28 effective tax brackets result, depending on the person’s filing status and what their income for the year was.


A taxpayer can file as single so long as they were not married in the previous year or were legally divorced by the end of the year. The single filing status is tied with married filing separately for the smallest standard deduction (we’ll get to deductions in a minute), and it means the person has to report income and expenses normally.

Married Filing Separately

Taxpayers can file married filing separately if they are married but the spouses do not want to combine their income and expenses. The married filing separately status means a person files similarly to if they were single: they do not report any of their spouse’s income or expenses, and they receive a standard deduction equal to that of the single taxpayer. If one partner in the marriage files separately, both must.

Married Filing Jointly

Taxpayers can file married filing jointly if they are married and both spouses want to combine their income and expenses for tax purposes. The married filing jointly status means the two submit one return, including aggregated information on both spouses’ income and expenses. The standard deduction for married filing jointly is double that of single/married filing separately.

Head of Household

Lastly, a taxpayer can file as head of household if they meet a list of specific requirements. The person must be single or unmarried, maintain a home for a child or qualifying dependent, have the dependent in the home for at least half of the year, have been legally divorced by the end of the year (in the event they were married for part of the year), and pay 50% or more of the cost for maintaining the home. This filing status gives a greater standard deduction than that of single or married filing separately and has larger brackets to leave the taxpayer more money to support dependents.

Qualifying Widow(er) with Dependent Child(ren)

Taxpayers can file qualifying widow(er) with dependent child(ren) for two years after the death of a spouse if the surviving spouse does not remarry. For the actual year of death, married filing jointly can still be used. The tax rates for qualifying widow(er) with dependent child(ren) status are the same as married filing jointly (the lowest of all rates).

What are Deductions?

Filing status and tax brackets are only part of the equation, though. Equally important in determining how much someone owes in taxes are deductions. Deductions reduce the amount of income on which a person has to pay tax. Deductions are not like tax credits, as tax credits directly reduce the amount of taxes a person has to pay instead of reducing the amount of income a person has to pay taxes on.

These, too, are different from adjusted gross income: adjusted gross income is a person’s gross income (the amount they made in a year not counting taxes or expenses) minus certain pre-tax deductions such as alimony payments or IRA contributions. Adjusted gross income does not include federal deductions of any kind, and instead helps to determine what federal deductions a person may be eligible for.

There are two types of deductions: standard deductions and itemized deductions.

Standard Deduction

The standard deduction is a fixed amount that is based mainly on a person’s filing status. The standard deduction is also based on adjusted gross income, age, and a small handful of other factors.

As of October 2020, the basic standard deductions for tax year 2020 are

  • $12,400 for single and married filing separately taxpayers,
  • $24,800 for taxpayers who file married filing jointly or qualifying widow(er), and
  • $18,650 for taxpayers who file as a head of household.

For tax year 2021, the standard deduction amounts will be

  • $12,550 for single and married filing separately taxpayers,
  • $25,100 for taxpayers who file married filing jointly or qualifying widow(er), and
  • $18,800 for taxpayers who file as a head of household.

If the taxpayer is over age 65 or blind, the standard deduction increases by $1,650 for single, married filing separately, and head of household filers and by $1,300 for married filing jointly and qualifying widow(er) filers. If the taxpayer can also be claimed as a dependent on someone else’s return, their standard deduction amount is $1,100 or the sum of their total earned income plus $350, provided that amount is lower than the basic standard deduction amount. Taxpayers who are subject to alternative minimum tax (AMT) or kiddie tax should contact a tax professional for advice.

Itemized Deductions

Taxpayers can also choose to itemize their deductions. Itemized deductions allow taxpayers to subtract various large expenses from the amount of income they pay taxes on, but they must be calculated first. A person must itemize their deductions if the itemized deduction would be greater than the standard deduction. In addition, spouses must both either itemize their deductions or choose the standard deduction, regardless of whether they file separately or jointly.

Itemized deductions include large medical expenses, large dental expenses, charitable contributions, business use of home or car, theft losses, paid interest on a home, state and local taxes, mortgage debt, and many others.

These deductions have fairly strict requirements associated with them to ensure that taxpayers who choose to deduct these expenses can prove that they incurred the expenses and to prevent tax fraud (see more at IRS). Depending on the person, itemizing deductions may or may not be worth the effort. Still, though, the itemized deductions can add up to quite a bit more than the standard deductions, and some people can save hundreds or thousands of dollars by itemizing their deductions.

The Bottom Line

Ultimately, taxable income—and, thus, what marginal tax brackets apply—is based on the person’s adjusted gross income less deductions. Once that number has been calculated, it’s fairly easy to calculate how much tax is owed using the marginal tax bracket approach.

Tax Table

The following table shows the seven tax brackets, along with the four filing statuses, providing a comprehensive breakdown of how much a person would owe based on how much they make and what their filing status is. Since the 2020 filing instructions are still in draft form, the 2020 detailed tax tables have not yet been released, but they are generally available from the IRS website by the middle of January each year.

2020 Tax Brackets by Filing Status

Tax Bracket Single Married Filing Separately Married Filing Jointly Head of Household
10% $0-$9,875 $0-$9,875 $0-$19,750 $0-$14,100
12% $9,876-$40,125 $9,876-$40,125 $19,751-$80,250 $14,101-$53,700
22% $40,126-$85,525 $40,126-$85,525 $80,251-$171,050 $53,701-$85,500
24% $85,526-$163,300 $85,526-$163,300 $171,051-$326,600 $85,501-$163,300
32% $163,301-$207,350 $163,301-$207,350 $326,601-$414,700 $163,301-$207,350
35% $207,351-$518,400 $207,351-$311,026 $414,701-$622,050 $207,351-$518,400
37% >$518,400 >$311,026 >$622,050 >$518,400

2021 Tax Brackets by Filing Status

Tax Bracket Single Married Filing Separately Married Filing Jointly Head of Household
10% $0-$9,950 $0-$9,950 $0-$19,900 $0-$14,200
12% $9,951-$40,525 $9,951-$40,425 $19,901-$81,050 $14,201-$54,200
22% $40,526-$86,375 $40,525-$86,375 $81,051-$172,750 $54,201-$86,50
24% $86,376-$164,925 $86,375-$164,925 $172,751-$329,850 $86,351-$164,900
32% $164,926-$209,425 $164,925-$209,425 $329,851-$418,850 $164,901-$209,400
35% $209,426-$523,600 $209,425-$314,150 $418,851-$628,300 $209,401-$523,600
37% >$523,600 >$314,150 >$628,300 >$523,600

Final Thoughts

So, on the surface, the progressive tax system of the United States seems very simple. A closer look, however, shows the layers of complexity hiding beneath that simple exterior. The seven tax brackets and four filing statuses result in 28 effective tax brackets, and the marginal tax bracket system means that taxpayers don’t pay the highest percentage on all of their income, but instead pay each percentage based on the portion of their income that falls into each bracket. Deductions further change how much a person owes by allowing them to either take the standard amount for their filing status and income or by allowing them to itemize their biggest expenses for the year and subtract them from the amount of income they pay taxes on. Overall, the income tax system of the United States seems imposing and intimidating, but when armed with the right knowledge, it makes sense.

See Also: