how tax tables work
business and individual taxpayers pay an effective tax rate on their income every year the tax paid by each entity depends on a number of factors such as based on these factors and the tax rates set for the year taxpayers and taxing authorities can determine the amount of tax to be paid by each taxpayer a typical tax table shows breakpoint income levels above and below which different tax rates will apply but the income used in tax tables is taxable income not the gross income taxable income refers to gross income minus deductions thus only the dollar amount left after factoring in deductions is subject to income tax for example the standard deduction for 2022 is 12 950 for single taxpayers 13 850 for 2023 12a taxpayer who earns 65 000 for the year and only qualifies for the standard deduction pays income tax on 52 050 65 000 12 950 in 2022 generally speaking the higher a taxpayer s taxable income the more they are taxed tax tables are set up with different columns for each filing status and rows of various taxable income amounts on the left a person s tax liability can be traced on the table based on their tax filing status and the amount transferred to the individual s income tax form qualifying widows or widowers can use the married filing jointly category for at least two years following the death of their spouses 3special considerationstax tables are commonly used by individual and corporate taxpayers with modest income levels high income earners tend to use more detailed tax rate schedules in conjunction with itemized deductions most states use tax tables to determine personal income tax the states that do not assess personal income tax are alaska florida nevada south dakota tennessee texas washington and wyoming new hampshire only assesses a tax on dividend and interest income 4as noted above tax tables change from year to year and vary from state to state investors should always be sure that they use the correct tax tables based on their income sources and area of residence example of a tax tableas noted above the irs provides updated tax and earned credit tables each year it provides a tax range based on income levels and divides the amount owed based on your tax filing status the following is the tax table for taxpayers who fall in the 46 000 taxable income range for 2022 5