Income Tax Calculator
Do you know how much you owe in taxes?
The federal personal income tax administered by the Internal Revenue Service (IRS) requires nearly every working American to file their tax returns each year.
Income taxes in the United States are calculated on a basis of tax ranges, from 10% to 37%.
Our income tax calculator will give you an estimate of the potential amount owed on your federal and state tax return, based on the 2022 tax brackets. You can also compare the amount owed by Americans living in other states with the same income level.
When is tax season 2023?
April 18th, 2023 is the federal tax deadline for individuals and small businesses to file their 2022 taxes. While April 15th is the normal deadline, it falls on a weekend in 2023 meaning the IRS would move it to the next business day, however, April 17th is Emancipation Day, a federally recognized holiday. For business owners, the W2 and 1099 forms must be filed by January 31, 2023.
Will the 2023 tax season be normal?
This year’s taxes should return back to the way they were prior to COVID-19, where widespread office closures delayed the 2020 tax filings so severely that it ended up affecting the 2021 filing season as well. It was also the time when new tax credits and deductions were introduced to prop up ailing businesses where customer spending stalled due to quarantine orders and widespread layoffs, in addition to stimulus checks to help most Americans.
What is income tax?
Income taxes are those that are collected by the government from individuals and businesses on the local, state (excluding Alaska, Florida, Nevada, South Dakota, Tennessee, Washington, and Wyoming), and federal levels. These taxes are imposed on income generated from the aforementioned to determine their tax obligations.
Normally applied to the percentage of an income, the rate can vary based on the type of income, amount, and taxpayer’s filing status.
The federal government uses income taxes as one of several different taxes to fund public services. There are two primary types of income taxes:
- Individual Income Tax – Also known as personal income tax, individuals pay based on their salary, wages, or other taxable earnings. Most people will not pay the full amount due to deductions, tax credits, and exemptions.
- Business or Corporate Income Tax – Small businesses, corporations, self-employers, partnerships, and other business entities that are for-profit are subject to income taxes. These typically apply to income after subtracting capital and operating expenses from the revenue.
How to reduce taxable income
The more a person pays in income taxes, the less money they get to keep in their own pockets. Lowering one’s taxes is a popular financial strategy among individuals and business owners. The most common way to lower one’s tax rate is to reduce their taxable income.
While increased standard deductions under the Tax Cuts and Jobs Act have been afforded, taxable income can be reduced by taking strategic measures. Here are a few of the routes available:
Employer-Sponsored Plan – A type of retirement plan that’s only available through an employer and where the employer also makes contributions on the employee’s behalf, such as a 401(k) or 403(b. Those enrolled can make pretax contributions up to $22,500 in 2023, up from $20,500 in 2022. Those 50 and older are allotted “catch-up contributions” of $7,500 in 2023, an improvement from $6,500 last year.
Individual Retirement Account (IRA) –. Like a 401(k), an IRA is a tax-advantaged retirement the key difference is that it is not offered directly through the employer. Having an IRA and 401(k) is allowed, however, there is a limitation on the combined total that you can contribute to your retirement accounts in a single year while still getting those tax advantages. For 2022 the total contributions can’t be more than $6,000 and if you’re age 50 or over the maximum is $7,000.
Traditional IRA contributions can be deducted from someone’s tax return, reducing the taxes owed in that tax year.
The Secure Act – Encourages business owners to set up retirement plans for their employees; it provides tax incentives should they choose to collaborate with other small businesses to offer Multiple Employer Plans or MEPs.
The Setting Every Community Up for Retirement Enhancement (SECURE) became law as of Jan. 1, 2020. It changed a variety of retirement account rules, such as who is eligible to contribute to retirement accounts and when withdrawals are required. It also passed into effect:
- The required minimum distribution age raised to 72 from 70 ½.
- The age limit for IRA contributions was removed.
- Inherited retirement account distributions MUST be taken within 10 years.
- New parents can take penalty-free withdrawals.
- Long-term part-time employees are eligible for 401(k) plans.
What is tax filing status and what is it used for?
Closely tied to an individual’s marital status, filing status (or tax brackets) is a category that defines the type of tax return form used when filing taxes.
Filing status is important because it affects their tax bracket or the amount they must pay. It is determined by marital status, number of children, occupation, and several other factors. Filing your taxes honestly is very important or will be considered fraudulent and penalties will be assessed.
Tax filing status options
A single filer is unmarried, divorced, a registered domestic partner, or legally separated according to state law. Heads of households or widowers cannot fall under the “single” category. These filers will have lower income limits for most exemptions.
Individuals married at the end of the tax year can choose to file with their spouse, or file separately if they should choose. Under a married filing status, couples can record their respective incomes, exemptions, and deductions on the same tax return. It often provides a bigger refund or lower tax obligation.
Joint filing works best if one spouse has a significantly higher income. Otherwise, should both spouses work, and the income and itemized deductions are large and unequal, it can result in disparity and be more advantageous to file alone. Should you choose this option, you will use the single filing status.
A single or unmarried taxpayer who pays for a minimum of 50% of the costs of supporting their household and stays with family members for whom they provide support for at least 6 months out of the year.
This includes paying more than half of the total household bills, rent or mortgage, property taxes, and other household expenses.
Because of this, a head of household benefits from a lower tax rate.
The year in which a spouse passes, the surviving spouse can normally use a joint filing status. In the following two years after, the surviving partner can file as a qualifying surviving spouse. They cannot continue claiming an exemption for the deceased yet claiming the standard deduction for a jointly filing married couple is allowed.
The tax bracket and income ranges for a surviving spouse are the same as those for married filing jointly.
| Federal Income Tax Rate 2023 | For Single Filers | For Married (Individuals Filing Jointly or Surviving Spouse) | For Head of Households | For Qualifying widow(er) with dependent child |
|---|---|---|---|---|
| 10% | $0 – $11,000 | $0 – $22,000 | $0 – $15,700 | $0 – $22,000 |
| 12% | $11,001 – $44,725 | $22,001 – $89,450 | $15,701 – $59,850 | $22,001 – $89,450 |
| 22% | $44,726 – $95,375 | $89,451 – $190,750 | $59,851 – $95,350 | $89,451 – $190,750 |
| 24% | $95,376 – $182,100 | $190,751 – $364,200 | $95,351 to $182,100 | $190,751 – $364,200 |
| 32% | $182,101 – $231,250 | $364,201 – $462,500 | $182,101 – $231,250 | $364,201 – $462,500 |
| 35% | $231,251 – $578,125 | $462,501 – $693,750 | $231,251 – $578,100 | $462,501 – $693,750 |
| 37% | $578,125 or more | $693,751 or more | $578,101 or more | $693,751 or more |
Frequently asked questions
Do any states not have income taxes? If so, which ones?
Yes, there are 9 states where you are not required to pay income tax. They are Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming.
Why was no federal income tax withheld from my paycheck?
It could be as simple as an error, or it could be a legit reason. Some of the instances where this may occur are: if you didn’t earn enough during the fiscal year, you are exempt from federal taxes, you live and work in different states or you live in an income tax-free state.
What is federal income tax liability?
The amount of taxes you owe to the federal government on your annually earned income. Based on how much you’ve earned, you may or may not owe any federal taxes; those who make less than the standard deduction do not owe any income taxes.
What is pre-tax income?
Earnings before taxes, or pretax income, is the overall income earned by a business before taxes are subtracted or accounted for.
Due to pretax earnings excluding taxes, this measure enables the profitability of companies to be compared across industries or regions where taxes differ.
What is federal withholding?
Where your employer takes a certain amount or percentage out of your paycheck for taxes, sending it to the IRS on your behalf. Tax refunds are granted should too much money be withheld, but if too little is withheld, money will be owed when your return is filed.
How much do self-employed individuals pay in taxes?
For individuals who work for themselves, their tax rate stands at 15.3%. Consisting of two parts: 12.4% for Social Security and 2.9% for Medicare.
How much will I pay in taxes?
Use our free tax calculator at the top of the page to find out!
How much should I set aside for taxes?
A general rule is to set aside 30-35% of your total income for taxes if you’re working on a 1099 employment basis.
Independent contractors are required to pay taxes 4 times a year, once per quarter.
Can I get a tax extension?
A tax extension doesn’t give you more time to pay, only more time to finish any necessary paperwork.
An extension for your taxes can be done by submitting Form 4868 with the IRS online or by mail. It must be done BEFORE the last day for filing taxes. This extension gives you additional months to prepare your return no matter the reason.