February 27, 2020

Tax Brackets and Statuses

Understanding tax brackets and your tax status is crucial for planning your taxes. With this knowledge, you can optimize your tax returns and navigate the world of taxes with confidence.

Filing Status

Your filing status is a reflection of your life and earning situation for the tax year. Selecting the correct filing status is crucial for determining taxes owed, your standard deduction, and eligibility for tax credits. The main filing statuses are Single, Married Filing Jointly, Married Filing Separately, Head of Household, and Qualifying Widow(er) with Dependent Child. Each status caters to a specific taxpayer situation and has unique criteria.

The Head of Household status is for single taxpayers providing primary care for a dependent. It offers lower tax rates and higher standard deductions than the Single filing status. Married Filing Jointly increases the size of the brackets but takes both partners’ income to determine the income level. Married Filing Separately can be beneficial over Single, but disqualifies taxpayers from certain tax benefits. Qualifying Widow(er) with Dependent Child status helps retain benefits of Married Filing Jointly for two years after the spouse’s death if they have a dependent child.

Tax Brackets

A tax bracket is a range of income. The combination of your tax bracket and tax status is what determines the percentage of your income that you owe in taxes (also called your tax rate). In the United States, the federal tax system is progressive, meaning that as a taxpayer’s income increases, the tax rate applied to their income also rises. Here is the tax bracket breakdown for tax year 2024, due by April 2025.

For Single Filers:

10% on income up to $11,600
12% on income $11,601 to $47,150
22% on income $47,151 to $100,525
24% on income $100,526 to $191,950
32% on income $191,951 to $243,725
35% on income $243,726 to $609,350
37% on income $609,351 or more

For Married Couples Filing Jointly:

10% on income up to $23,200
12% on income $23,201 to $94,300
22% on income $94,301 to $201,050
24% on income $201,051 to $383,900
32% on income $383,901 to $487,450
35% on income $487,451 to $731,200
37% on income $731,201 or more

For Married Couples Filing Separately:

10% on income up to $11,600
12% on income $11,601 to $47,150
22% on income $47,151 to $100,525
24% on income $100,526 to $191,950
32% on income $191,951 to $243,725
35% on income $243,726 to $365,600
37% on income over $365,601

For Heads of Households:

10% on income up to $16,550
12% on income $16,551 to $63,100
22% on income $63,101 to $100,500
24% on income $100,501 to $191,950
32% on income $191,951 to $243,700
35% on income $243,701 to $609,350
37% on income over $609,351

So, if you earned an annual income of $50,000 in 2024 and your status is single, you fall into the 22% tax bracket. But, this doesn’t mean your entire income is taxed at 22%. Instead, each portion of your income that falls into each bracket is taxed at that rate. The first $11,600 is taxed at 10%, the amount over $11,600 and up to $47,150 is taxed at 12%, and only the income above $47,150 up to your total income of $50,000 is taxed at 22%.

There are a few terms people use when referring to tax rates. The marginal tax rate is the percentage of tax applied to your income for each tax bracket in which you qualify, essentially the rate applied to your last dollar of income. In contrast, the effective tax rate represents the average rate at which your total income is taxed, calculated by dividing the total tax you pay by your total income. This tiered system ensures that your effective tax rate is lower than your marginal tax bracket.

Alternative Minimum Tax

The Alternative Minimum Tax (AMT) is a separate tax system that ensures high-income individuals and corporations pay at least a minimum amount of tax. By having two tax rates (26% and 28%) and eliminating many deductions, including state and local taxes and the standard deduction, it gives taxpayers with higher income fewer options to reduce their tax payments. Taxpayers must calculate their tax liability twice and pay the higher of the two amounts. This is usually done automatically when you use tax preparation software.

The AMT has intricate regulations with fewer exceptions and applies to individuals with high incomes. The Tax Cuts and Jobs Act of 2017 increased the income limits, resulting in fewer taxpayers impacted by it. The AMT acts as a safeguard to the standard tax system and ensures a minimum level of tax payment from those with more significant earnings or substantial deductions.

When Do You Need to Complete a Tax Return?

Knowing when you need to file your tax return is key to avoiding penalties and claiming any refund you’re owed. For most individuals, the federal tax deadline is April 15th of each year. If that date falls on a weekend or a legal holiday, that deadline moves to the next business day.

While many state income tax deadlines follow the federal schedule, some may vary slightly. This is why it’s always wise to check your specific state’s tax agency for their exact due date.

Are there exceptions to the April 15 deadline?

Yes. While April 15th is the standard deadline, a couple common exceptions include:

Tax Extensions: If you can’t file by April 15th, you can request an extension from the IRS. This gives you until October 15th (or the next business day if that falls on a weekend/holiday) to submit your tax return—but it does not extend the time to pay. If you owe taxes, they’re still due April 15 to avoid penalties and interest.
Estimated Taxes: Certain types of income aren’t subject to withholding—such as self-employment income, freelance, dividends, interest, or investments—meaning, you may be required to pay estimated taxes quarterly throughout the year. These payments are typically due the 15th of each of the following months: April, June, September, and January of the following year.

Who Has to File a Tax Return?

Most U.S. citizens, lawful permanent residents, and people living, working, and earning U.S. income are required to file a tax return if they meet the income thresholds. These limits vary depending on your filing status and gross income (all taxable income you receive, including wages, business income, and more).

It’s important to note that these amounts are adjusted annually for inflation, so always check the official IRS guidelines for the specific tax year.

What are the thresholds for having to file a tax return?

For the 2025 tax year (filed in 2026), most taxpayers must file a federal return if their gross income is at or above the following amounts, based on filing status:

Single: $15,000
Married filing jointly: $30,000
Married filing separately: $5
Head of household: $22,500
Qualifying surviving spouse: $30,000

These amounts are updated annually. If you’re age 65 or older or blind, the thresholds are generally higher. You can find the specific details in IRS Publication 17, Your Federal Income Tax.

There are some situations where you must file a tax return—and pay taxes—regardless of if your income is below the filing threshold. For example, if you owe certain additional taxes, such as self-employment tax (if your net earnings from self-employment were $400 or more), alternative minimum tax (AMT), or social security and Medicare tax on unreported tips.

I’m a dependent, do I need to file taxes?

Even if you’re claimed as a dependent on someone else’s tax return, you might still need to file on your own if any of the following apply:

Your unearned income (interest, dividends, or capital gains) was over $1,250.
Your earned income (from working a job) was over $14,600.
Your gross income was more than the greater of $1,250, or your earned income (up to $14,150) + $400.

Wait, what does that third rule mean?

Let’s say you earned $6,000 working part-time at a local pizza place. You also made $300 in interest from a savings account as part of your “unearned income.” Since your earned income ($6,000) is less than $14,600, and your unearned income ($300) is less than $1,250, you likely don’t need to file your own federal taxes. But here’s the catch: if your job withheld taxes from your pay, it’s a good idea to file a return to potentially get that money back.

Disclaimer
While we hope you find this content useful, it is only intended to serve as a starting point. Your next step is to speak with a qualified, licensed professional who can provide advice tailored to your individual circumstances. Nothing in this article, nor in any associated resources, should be construed as financial or legal advice. Furthermore, while we have made good faith efforts to ensure that the information presented was correct as of the date the content was prepared, we are unable to guarantee that it remains accurate today.

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