The amount of federal income tax you owe is determined by your taxable income, which is calculated by subtracting the greater of the standard or itemized deductions from your adjusted gross income. The IRS uses a system of tax brackets to determine the amount of tax owed on different portions of your taxable income. For tax year 2023, the tax rates and brackets for single individuals and married couples filing jointly are shown in the tables below:
2023 Federal Income Tax Brackets for Single individuals
| Taxable income |
Taxes owed |
| $11,000 or less |
10% of the taxable income |
| $11,001 to $44,725 |
$1,100 plus 12% of amount over $11,000 |
| $44,726 to $95,375 |
$5,147 plus 22% of amount over $44,725 |
| $95,376 to $182,100 |
$16,290 plus 24% of amount over $95,375 |
| $182,101 to $231,250 |
$37,104 plus 32% of amount over $182,100 |
| $231,251 to $578,125 |
$52,832 plus 35% of amount over $231,250 |
| $578,126 or more |
$174,238.25 plus 37% of amount over $578,125 |
2023 Federal Income Tax Brackets for Married Couples Filing Jointly
| Taxable income |
Taxes owed |
| $22,000 or less |
10% of the taxable income |
| $22,001 to $89,450 |
$2,200 plus 12% of amount over $22,000 |
| $89,451 to $190,750 |
$10,294 plus 22% of amount over $89,450 |
| $190,751 to $364,200 |
$32,580 plus 24% of amount over $190,750 |
| $364,201 to $462,500 |
$74,208 plus 32% of amount over $364,200 |
| $462,501 to $693,750 |
$105,664 plus 35% of amount over $462,500 |
| $693,751 or more |
$186,601.50 plus 37% of amount over $693,750 |
Starting in 2023, the capital gains tax rates for high-income earners will remain at the 2022 levels, which are higher than the rates in 2021. However, for those earning less than $1 million, the capital gains tax rate will return to pre-2022 levels, which were lower. Specifically, the capital gains tax rate for those earning less than $1 million will be 15%, while the top rate of 20% will only apply to those earning $1 million or more.
It is important to note that for high-income earners, the 3.8% net investment income tax still applies on top of the capital gains tax rate. This additional tax was created by the Affordable Care Act to help fund the healthcare law and applies to certain high-income taxpayers. The 3.8% tax applies to the lesser of a taxpayer's net investment income or the amount by which their modified adjusted gross income (MAGI) exceeds certain thresholds.
For individuals, the 3.8% tax applies if their MAGI is over $200,000, and for married couples filing jointly, the tax applies if their MAGI is over $250,000. Therefore, if you have a high income and sell an asset that results in a capital gain, you will be subject to both the capital gains tax and the 3.8% net investment income tax.
2023 Federal Capital Gains Tax Rates
| Filing status |
0% RATE |
15% RATE |
20% RATE |
| Single |
Up to $44,625 |
$44,626 – $492,300 |
Over $492,300 |
| Head of household |
Up to $59,750 |
$59,751 – $523,050 |
Over $523,050 |
| Married filing jointly |
Up to $89,250 |
$89,251 – $553,850 |
Over $553,850 |
| Married filing separately |
Up to $44,625 |
$44,626 – $276,900 |
Over $276,900 |
The standard deduction is a fixed dollar amount that reduces your taxable income, which can be taken by taxpayers without having to provide any additional information. It is an alternative to itemizing deductions and is generally used by those who do not have many qualifying deductions or tax credits to claim. The amount of the standard deduction that a taxpayer can take is determined based on their filing status, such as single, married filing jointly, married filing separately, or head of household. Taxpayers who are 65 or older, or blind, can add additional amounts to their standard deduction. For the 2022 tax year, the standard deduction is $12,950 for single filers, $25,900 for joint filers, and $19,400 for heads of household. For the 2023 tax year, the standard deduction will increase to $13,850 for single filers, $27,700 for joint filers, and $20,800 for heads of household. Taxpayers who are considering whether to claim the standard deduction or itemize should compare the two options and choose the one that will result in the lowest tax liability.
Standard Deduction Amounts for 2023
| Filing status |
Standard deduction amount |
| Single |
$13,850 |
| Head of household |
$20,800 |
| Married filing jointly |
$27,700 |
| Qualifying widow or widower |
$27,700 |
| Married filing separately |
$13,850 |
