how income tax brackets work
most taxpayers all except those who fall squarely into only the minimum bracket have income that is taxed progressively this means that their income is subject to multiple rates beyond the nominal rate of their tax bracket 7for example an annual income of 100 000 fits the 22 tax bracket for all filing statuses in tax year 2024 however the entire 100 000 isn t taxed at 22 it s taxed at the different rates aligned with the various brackets of income that cover the segments of income up to 100 000 so ultimately a taxpayer pays less than they would if their total income were taxed at 22 7thus a taxpayer s tax bracket does not necessarily reflect the percentage of their income that they will pay in taxes the term for this is the effective tax rate 8 see an example of this in the next section there are numerous online sources to find your specific federal income tax bracket the irs makes available a variety of information including annual tax tables that provide highly detailed tax filing statuses in increments of 50 of taxable income up to 100 000 9other websites provide tax bracket calculators that do the math for you as long as you know your filing status and taxable income your tax bracket can shift from year to year depending on inflation adjustments and changes in your income and status so it s worth checking on an annual basis tax brackets are adjusted each year for inflation using the consumer price index cpi 10example how to calculate your taxeshere s the tax responsibility and the effective tax rate for a single filer with a taxable income of 50 000 in 2023 add the taxes owed in each of the brackets the individual s effective tax rate is approximately 13 of income taxes that you pay on 401 k withdrawals are also based on tax brackets 11