What are the Tax Brackets and Federal Income Tax Rates for the 2021-2022 Tax Years?

Income tax has always been a challenge to deal with financially as it eats into your capital gains and profits and makes your earnings less valuable. However, every law-abiding citizen has to pay tax no matter if they belong to the working class, have a high-net-worth, an investor, or an inheritor or beneficiary of an estate. It is mandatory and not something you can get away with. Thus, it is in your best interest to know its rules, rates, and implications.

The federal US government primarily levies income tax. The federal income tax rate can differ each year and is decided after taking into consideration various factors. Each year new federal tax brackets are announced by the Internal Revenue Services (IRS) after adjusting them with respect to inflation. In addition, the IRS also revises the allowances, deductions, and thresholds every year.

The United States levies tax on all citizens and residents of the country. Additionally, some states also levy a state tax. The tax charged is directly proportional to your income meaning the higher your income, the higher the tax rate you will have to pay. The United States has a progressive tax system wherein in addition to paying a higher tax on higher income, the tax rates are applicable to only the part of your income that exceeds the threshold and not the whole amount. For example, say your income falls in the tax bracket of $40,526 to $86,375 where you must pay a straight 22% tax. Herein, you will have to pay 12% (previous tax bracket) on the amount up to $40,525 and 22% on the amount over $40,526. It is advised that you consult with a professional financial advisor who can suggest tax-saving strategies based on the tax bracket you fall in.

Table of Contents

What is the federal income tax rate?

The federal income tax rate is determined as per the taxpayer’s filing status and comprises four categories. These are:

Single filers
Married filers filing jointly
Married filers filing separately
Head of household

Let us look at the 2021 and 2022 federal income tax brackets:

(Please note that the 2021 tax brackets are provided for those filing taxes in April 2022 or in October 2022, with an extension)

2021 Federal Income Tax Brackets

(For taxes due in Apr 2022 or in Oct 2022 with an extension)

Single filers

Federal income tax rate	Taxable income brackets	Tax
10%	$0 to $9,950	10% on taxable income
12%	$9,951 to $40,525	$995 + 12% on the amount over $9,950
22%	$40,526 to $86,375	$4,664 + 22% on the amount over $40,525
24%	$86,376 to $164,925	$14,751 + 24% on the amount over $86,375
32%	$164,926 to $209,425	$33,603 + 32% on the amount over $164,925
35%	$209,426 to $523,600	$47,843 + 35% on the amount over $209,425
37%	$523,601 or higher	$157,804.25 + 37% on the amount over $523,600

Married filers filing jointly

Federal income tax rate	Taxable income brackets	Tax
10%	$0 to $19,900	10% on taxable income
12%	$19,901 to $81,050	$1,990 + 12% on the amount over $19,900
22%	$81,051 to $172,750	$9,328 + 22% on the amount over $81,050
24%	$172,751 to $329,850	$29,502 + 24% on the amount over $172,750
32%	$329,851 to $418,850	$67,206 + 32% on the amount over $329,850
35%	$418,851 to $628,300	$95,686 + 35% on the amount over $418,850
37%	$628,301 or more	$168,993.50 + 37% on the amount over $628,300

Married filers filing separately

Federal income tax rate	Taxable income brackets	Tax
10%	$0 to $9,950	10% on taxable income
12%	$9,951 to $40,525	$995 + 12% on the amount over $9,950
22%	$40,526 to $86,375	$4,664 + 22% on the amount over $40,525
24%	$86,376 to $164,925	$14,751 + 24% on the amount over $86,375
32%	$164,926 to $209,425	$33,603 + 32% on the amount over $164,925
35%	$209,426 to $314,150	$47,843 + 35% on the amount over $209,425
37%	$314,151 or more	$84,496.75 + 37% on the amount over $314,150

Head of household

Federal income tax rate	Taxable income brackets	Tax
10%	$0 to $14,200	10% on taxable income
12%	$14,201 to $54,200	$1,420 + 12% on the amount over $14,200
22%	$54,201 to $86,350	$6,220 + 22% on the amount over $54,200
24%	$86,351 to $164,900	$13,293 + 24% on the amount over $86,350
32%	$164,901 to $209,400	$32,145 + 32% on the amount over $164,900
35%	$209,401 to $523,600	$46,385 + 35% on the amount over $209,400
37%	$523,601 or more	$156,355 + 37% on the amount over $523,600

2022 Federal Income Tax Brackets

(2022 federal income tax brackets for those filing taxes in April 2023)

Single filers

Federal income tax rate	Taxable income brackets	Tax
10%	$0 to $10,275	10% on taxable income
12%	$10,276 to $41,775	$1,027.50 + 12% on the amount over $10,275
22%	$41,776 to $89,075	$4,807.50 + 22% on the amount over $41,775
24%	$89,076 to $170,050	$15,213.50 + 24% on the amount over $89,075
32%	$170,051 to $215,950	$34,647.50 + 32% on the amount over $170,050
35%	$215,951 to $539,900	$49,335.50 + 35% on the amount over $215,950
37%	$539,901 or more	$162,718 + 37% on the amount over $539,900

Married filers filing jointly

Federal income tax rate	Taxable income brackets	Tax
10%	$0 to $20,550	10% on taxable income
12%	$20,551 to $83,550	$2,055 + 12% on the amount over $20,550
22%	$83,551 to $178,150	$9,615 + 22% on the amount over $83,550
24%	$178,151 to $340,100	$30,427 + 24% on the amount over $178,150
32%	$340,101 to $431,900	$69,295 + 32% on the amount over $340,100
35%	$431,901 to $647,850	$98,671 + 35% on the amount over $431,900
37%	$647,851 or more	$174,253.50 + 37% on the amount over $647,850

Married filers filing separately

Federal income tax rate	Taxable income brackets	Tax
10%	$0 to $10,275	10% on taxable income
12%	$10,276 to $41,775	$1,027.50 + 12% on the amount over $10,275
22%	$41,776 to $89,075	$4,807.50 + 22% on the amount over $41,775
24%	$89,076 to $170,050	$15,213.50 + 24% on the amount over $89,075
32%	$170,051 to $215,950	$34,647.50 + 32% on the amount over $170,050
35%	$215,951 to $323,925	$49,335.50 + 35% on the amount over $215,950
37%	$323,926 or more	$87,126.75 + 37% on the amount over $323,925

Head of household

Federal income tax rate	Taxable income brackets	Tax
10%	$0 to $14,650	10% on taxable income
12%	$14,651 to $55,900	$1,465 + 12% on the amount over $14,650
22%	$55,901 to $89,050	$6,415 + 22% on the amount over $55,900
24%	$89,051 to $170,050	$13,708 + 24% on the amount over $89,050
32%	$170,051 to $215,950	$33,148 + 32% on the amount over $170,050
35%	$215,951 to $539,900	$47,836 + 35% on the amount over $215,950
37%	$539,901 or more	$161,218.50 + 37% on the amount over $539,900

You can compute your taxability by using a federal income tax rate calculator at the time of filing your taxes.

What is meant by the Alternative Minimum Tax (AMT)?

AMT refers to a special tax levied on high-income individuals wherein a ceiling is placed on the percentage of taxes that a filer must pay to the government irrespective of the number of deductions claimed by the taxpayer. Under the AMT, individuals have to calculate their tax twice by using a federal income tax rate calculator. First, you must calculate your tax under the normal tax system given above and the second time as per AMT. The final tax to be paid will be the higher of the two taxes calculated as per the two tax systems.

Say, your AMT tax comes out higher than ordinary tax, in this situation, you will have to comply with two tax rates 26% and 28%. The IRS allows you to claim an exemption in this scenario. For 2022, you can file a claim for taxable income exemption on AMT for income of up to:

$75,900 for single filers
$59,050 for married filers filing separately
$118,100 for married filers filing jointly
$75,900 for the head of household
$26,500 for trusts and estates

AMT tax brackets 2022

Taxable income bracket	AMT
More than $206,100 for all taxpayers	28%
More than $103,050 for married filers filing separately	28%
Lower than $206,100 for all taxpayers	26%
Lower than $103,050 for married filers filing separately	26%

What is the tax charged on long-term capital gains?

Long-term capital gains tax rates differ on the taxable income and the filing status. The tax rates for 2022 are as follows:

Single filers

Taxable income brackets	Tax rate
0%	Up to $41,675
15%	$41,676 to $459,750
20%	Over $459,750

Married filers filing jointly

Taxable income brackets	Tax rate
0%	Up to $83,350
15%	$83,351 to $517,200
20%	Over $517,200

Married filers filing jointly

Taxable income brackets	Tax rate
0%	Up to $41,675
15%	$41,676 to $258,600
20%	Over $258,600

Head of household

Taxable income brackets	Tax rate
0%	Up to $55,800
15%	$55,801 to $488,500
20%	Over $488,500

We have covered the federal tax brackets for 2022. However, apart from this, you should also know and understand the deductions and credits available to you that can help minimize your tax liability for the year.

What is the standard deduction for the present federal income tax rate for 2022?

Standard deduction means the sum that can be deducted from your gross income without you having to furnish any proof of investment. This is a standard amount that is deducted for all taxpayers. Let us look at the standard deduction limits for 2022:

Single filers: For 2022, the standard deduction for single filers has been set at $12,950. Compared to 2021, it is an increase of $400 from $12,550.
Married filers filing jointly: The standard deduction for married filers filing jointly has been fixed at $25,900 in 2022. Compared to 2021, it is an increase of $800 from $25,100.
Married filers filing separately: The standard deduction for married filers filing separately is the same as single filers, i.e., $12,950.
Head of household: The standard deduction for the head of household has been kept at $19,400 in 2022. This is a $600 increase from $18,800 in 2021.

The elderly and those suffering from disabilities have been afforded some other standard deduction provisions. These are:

For 2022, all taxpayers aged 65 or older can claim a standard deduction of $1,400, up from $1,350 in 2021.
For 2022, all taxpayers who suffer from blindness can claim a standard deduction of $1,400, up from $1,350 in 2021.
From 2022 onwards, all taxpayers aged 65 or older who suffer from blindness can claim both standard deductions.

What is meant by the Earned Income Tax Credit (EITC) for 2022?

EITC refers to a refundable tax credit that can be claimed by low and moderate-income groups on their income tax return. To avail of this tax credit, the individual must have at least $1 as earned income for the financial year. Moreover, EITC is exclusive of income earned from pension or unemployment benefits. In addition, you must also have an investment income of $10,000 or lower. For 2022, the EITC is as follows:

Let us find out EITC for taxes due in April 2022 or in October 2022 after the extension:

Number of children in a family	Maximum earned income tax credit	Maximum Adjusted Gross Income (AGI) for single filers	Maximum AGI for the head of household	Maximum AGI for married joint filers
No children	$1,502	$21,430	$21,430	$27,380
1 child	$3,618	$42,158	$42,158	$48,108
2 children	$5,980	$47,915	$47,915	$53,865
3 or more children	$6,728	$51,464	$51,464	$57,414

Here is the EITC for taxes due in April 2023:

Number of children in a family	Maximum earned income tax credit	Maximum Adjusted Gross Income (AGI) for single filers	Maximum AGI for the head of household	Maximum AGI for married joint filers
No children	$560	$16,480	$16,480	$22,610
1 child	$3,733	$43,492	$43,492	$49,622
2 children	$6,164	$49,399	$49,399	$55,529
3 or more children	$6,935	$53,057	$53,057	$59,187

What is the child tax credit for 2022?

It is a tax break given to American taxpayers for each qualifying dependent child. In 2021, the tax credit was $3,000 (children under age 18) or $3,600 (children under age 6) per eligible child however this may be reverted to $2000 for each qualifying child for 2022. This is applicable for married joint filers having an income of $400,000 and single filers having an income of $200,000. Do note that married joint filers will not be eligible to receive any credit at $440,000. In order to qualify, your child must be born by the end of 2022 and be dependent on you in 2022 itself.

What is the maximum allowable exclusion for gifts in 2022?

A gift can refer to any financial asset, property, cash, or otherwise, given to someone without receiving anything of comparable fair market value in return.

Each year the taxable limit for gifts is revised. For 2022, you can gift $16,000 without being taxed which is an increase of $1,000 over the previous year. You could gift up to $15,000 in gifts in 2021 without having to pay any tax on it. If you are giving a gift to your spouse, you can give them $164,000 without paying any tax. In 2021, the limit was set at $159,000 for the same. There is also a lifetime gift exclusion limit. For 2022, it was fixed at $12.06 million for individuals and $24.12 million for married couples. If you exceed the said limits, you could end up paying a gift tax ranging between 18% and 40%.

To conclude

As stated above, each year the federal income tax rates are revised. It is important to keep up with the new modifications when filing your taxes or claiming tax deductions. These changes are made on the basis of the prevalent rate of inflation by the IRS. You can minimize your tax liability by deploying tax-saving strategies and making use of a federal income tax rate calculator to avoid making any errors.

Use the free advisor match service to connect with a professional financial advisor who can help you reduce your tax liability, manage your finances, employ effective tax-saving strategies and help build a retirement nest egg. Answer a few simple questions about yourself and the match tool will help connect you to 1-3 financial advisors based on your financial requirements.