income tax

Understanding federal income taxes and marginal tax rates

 There is a tremendous misunderstanding about marginal income tax rates which are the highest rate at which your income is taxed. Income is taxed at increments by the IRS. Below is an example for a single person. Rates are different for married persons filing jointly and heads of households. the purpose of this example is to illustrate the graduated, progressive nature of federal income taxes. Unfortunately many states have adopted flat tax rates where all taxpayers pay at the same rate which is very regressive. Regressive taxes hurt low income people and benefit the wealthy (who have friends in state legislatures).

2022 Federal Income Taxes and Marginal Tax Rates

Standard deduction (SD) for single person 65 or older: $14,700. So, the first $14,700 of income is NOT taxed. After that see chart below shows how additional increments of income are taxed.

2022 Federal Income Tax Brackets and Rates for Single Filers

Tax Rate

For Single Filers



$0 to $10,275



$10,275 to $41,775



$41,775 to $89,075



$89,075 to $170,050



$170,050 to $215,950



$215,950 to $539,900



$539,900 or more


Source: Internal Revenue Service

For example, if your total income for 2022 is $50,000, the first $14,700 is not taxed. So only $39,725 is taxable; of that $10,275 is taxed at 10%, the remaining $29,450 is taxed at 12%. So the marginal tax bracket is 12%.

If you have taxable income of $100,000, the first $14,700 is not taxed. $10,275 is taxed at 10%, $31,500 is taxed at 12%, the remaining $28,825 is taxed at 22%; your marginal tax bracket is 22%.

In sum, the first $14,700 is not taxed. Then each additional increment is taxed at a higher rate but that higher rated only applies to the additional income. So, for example, if you earned $60,000, only the final $3,525 would be taxed at 22%.

The first $14,700 of income is NOT taxed.

The next $10,275 is taxed at 10%.

The next $31,500 is taxed at 12% (up to $41,775 of taxable income)

The remaining $3,525 would be taxed at 22%. So, your marginal income tax rate is 22%. If you earned an additional $100, you would owe $22 in tax.

If you had more than $89,075 + $14,700 ($103,775) your marginal tax rate would be 24%. If you had $104,000 of income, only the additional $25 would be taxed at 24%. Your marginal tax rate applies only to the final increment of income.


Source: Financial Planning for Women