Breaking down the tax brackets

Each bracket of your income is taxed at a different rate. As you make more money, a higher percentage may be owed in taxes.

Taxable income, single filer

Tax rate

10% $0 - $10,275

12% $10,275.01 - $41,775

22% $41,775.01 - $89,075

24% $89,075.01 - $170,050

32% $170,050.01 - $215,950

35% $215,950.01 - $539,900

37% Over $539,900

Taxable income, married and filing jointly

Tax rate

10% $0 - $20,550

12% $20,550.01 - $83,550

22% $83,550.01 - $178,150

24% $178,150.01 - $340,100

32% $340,100.01 - $431,900

35% $431,900.01 - $647,850

37% Over $647,850

Source: https://www.irs.gov/newsroom/irs-provides-tax-inflation-adjustments-for-tax-year-2022

So what does this mean?

Joe is single and has $50,000 in taxable income. Let’s calculate his taxes.

From $0 - $10,275, Joe is taxed at 10%.

$10,275 x 10% = $1,027.50

From $10,275.01 - $41,775, Joe is taxed at 12%.

$31,499.99 x 12% = $3,779.99

From $41,775.01 - $50,000, Joe is taxed at 22%.

$8,224.99 x 22% = $1,809.49

TOTAL TAX = $6,616.98

Joe’s marginal tax rate—the rate he pays on his top bracket—is 22%. But in reality, Joe’s tax liability—his effective tax rate—is about 13% of his taxable income.

Lisa is single and has $100,000 in taxable income.

From $0 - $10,275, Lisa is taxed at 10%.

$10,275 x 10% = $1,027.50

From $10,275.01 - $41,775, Lisa is taxed at 12%.

$31,499.99 x 12% = $3,779.99

From $41,775.01 - $89,075, Lisa is taxed at 22%.

$47,299.99 x 22% = $10,405.99

From $89,075.01 - $100,000, Lisa is taxed at 24%.

$10,924.99 x 24% = $2,621.99

TOTAL TAX = $17,835.47

Lisa’s marginal tax rate is 24%. But in reality, Lisa’s tax liability gives her an effective tax rate of about 18%.

Say Lisa and Joe fall in love and get married. They decide to file a joint tax return, with a combined taxable income of $150,000.

The first $0 - $20,550 they make is taxed at 10%.

$20,550 x 10% = $2,055

From $20,550.01 - $83,550, they are taxed at 12%.

$62,999.99 x 12% = $7,559.99

From $83,550.01 - $150,000, they are taxed at 22%.

$66,449.99 x 22% = $14,618.99

TOTAL TAX = $24,233

If they had stayed single, Joe and Lisa would have paid a combined $24,452. Filing jointly saves them $219, sometimes referred to as a “marriage benefit.”

If Joe and Lisa’s tax liability had been higher as a married couple filing jointly, the extra funds owed would be referred to as a “marriage penalty.”

But that’s not all ...

Different credits and deductions based on life events could affect Joe and Lisa’s tax liability.

If they start a family, they may qualify for new deductions and child care credits, and their tax liability would likely shrink.