How to get into a lower tax bracket and pay a lower federal income tax rate
Two common ways of reducing your tax bill are credits and deductions.
- Tax credits directly reduce the amount of tax you owe; they don't affect what bracket you're in.
- Tax deductions, on the other hand, reduce how much of your income is subject to taxes. Generally, deductions lower your taxable income by the percentage of your highest federal income tax bracket. So if you fall into the 22% tax bracket, a $1,000 deduction could save you $220.
In other words: Take all the tax deductions you can claim — they can reduce your taxable income and could kick you to a lower bracket, which means you pay a lower tax rate.
Single Filer
| Tax Rate | Taxable income bracket |
|---|
| 10% | $0 to $12,600 |
| 12% | $12,601 to $51,150 |
| 22% | $51,151 to $109,450 |
| 24% | $109,451 to $208,850 |
| 32% | $208,851 to $265,300 |
| 35% | $265,301 to $662,400 |
| 37% | $662,401 or more |
Married Filing Jointly
| Tax Rate | Taxable income bracket |
|---|
| 10% | $0 to $25,200 |
| 12% | $25,201 to $102,300 |
| 22% | $102,301 to $218,900 |
| 24% | $218,901 to $417,700 |
| 32% | $417,701 to $530,600 |
| 35% | $530,601 to $1,324,800 |
| 37% | $1,324,801 or more |
Married Filing Separately
| Tax Rate | Taxable income bracket |
|---|
| 10% | $0 to $12,600 |
| 12% | $12,601 to $51,150 |
| 22% | $51,151 to $109,450 |
| 24% | $109,451 to $208,850 |
| 32% | $208,851 to $265,300 |
| 35% | $265,301 to $662,400 |
| 37% | $662,401 or more |
Head of Household
| Tax Rate | Taxable income bracket |
|---|
| 10% | $0 to $18,900 |
| 12% | $18,901 to $68,450 |
| 22% | $68,451 to $109,450 |
| 24% | $109,451 to $208,850 |
| 32% | $208,851 to $265,300 |
| 35% | $265,301 to $662,400 |
| 37% | $662,401 or more |