Are you considering filing your tax returns in 2023? You should know the current Federal Income Tax Rates. These rates are set annually and are adjusted for inflation. Inflation reduces the dollar’s purchasing power, and the IRS makes adjustments annually to account for it.
What is the Federal Income Tax Rates for the Tax Year 2023?
- The highest tax rate applies to those earning $231,250 or more.
- If you have three or more qualifying children, the credit will increase to $7,430. This is an increase of nearly $1000 from last year’s $6,935 per child rate.
- There will also be a higher annual exclusion for gifts. In 2023, the exclusion for gifts will rise to $17,000, up from the current exemption of $11,000 for individuals and $12,250 for married couples.
Tax Brackets 2022 vs. Tax Brackets 2023
- Here’s the table showing the difference between the numbers of 2022 and 2023 for single filers:
| Tax bracket | 2022 | 2023 | Difference |
| 10% | 0 | 0 | 0 |
| 12% | $10,276 | $11,001 | $725 |
| 22% | $41,776 | $44,726 | $2,950 |
| 24% | $89,076 | $95,376 | $6,300 |
| 32% | $170,051 | $182,101 | $12,050 |
| 35% | $215,951 | $231,251 | $15,300 |
| 37% | $539,901 | $578,126 | $38,225 |
Here’s the table showing the difference between the numbers of 2022 and 2023 for married filers (joint):
| Tax bracket | 2022 | 2023 | Difference |
| 10% | $0 | $0 | $0 |
| 12% | $20,551 | $22,001 | $1,450 |
| 22% | $83,551 | $89,451 | $5,900 |
| 24% | $178,151 | $190,751 | $12,600 |
| 32% | $340,101 | $364,201 | $24,100 |
| 35% | $431,901 | $462,501 | $30,600 |
| 37% | $647,851 | $693,751 | $45,900 |
This increase in the top rate will help Americans shield more of their income from taxes in the future. It’s actually because the Internal Revenue Service has increased the standard deduction and adjusted the inflation thresholds. The top tax rate for individuals and married couples filing jointly will be 37 percent. These rates will increase by 7 percent from 2022 levels and will track the rise in the consumer price index.