In a previous article, Thinksmart Insurance discussed 8 types of taxes in the U.S. that Vietnamese immigrants should be aware of, including personal income tax. To clarify this, today’s article will delve into The federal income tax brackets for 2024 and 2023, providing readers with a comprehensive overview and enabling them to compare the differences in federal income taxes for 2024 and 2023 in the U.S.
Overview of Federal Income Tax Brackets in the U.S.
Federal income tax in the U.S. is divided into 7 tax brackets: 10%, 12%, 22%, 24%, 32%, 35%, and 37%, each corresponding to a specific income range. The income levels for each tax bracket are adjusted annually according to inflation. Therefore, keeping track of the annual federal income tax brackets is essential for Vietnamese immigrants in the U.S. to plan their finances effectively and avoid legal issues.
Unlike personal income tax in Vietnam, which has only one flat rate (10%), federal income tax in the U.S. is divided into seven progressive rates. This means the more you earn, the more you pay in taxes (up to 37% of your income, excluding other taxes such as gift tax, payroll tax, etc.). Moreover, U.S. federal income tax can be quite complex, as the same income level may be split into different brackets for tax purposes.
For example, if you are single with a taxable income of $60,000 in 2024, your federal income tax for 2024 would be calculated as follows:
- 10% on the first $11,600 ($1,160)
- 12% on the next $35,550 ($4,266 for income from $11,601 to $47,150)
- 22% on the remaining $12,850 ($2,827 for income from $47,151 to $60,000) => Total federal income tax for 2024: $8,253
One thing to note is that the U.S. government ensures that residents have enough post-tax income to cover expenses and even save or invest if they have a smart financial plan.
Federal Income Tax Brackets for 2024
Below are the federal income tax brackets for 2024 in the U.S., applicable for the 2024 tax year (to be filed by April 15, 2025).
| Federal Income Tax Brackets for Tax Year 2024 | ||||
| Tax Rate | Single | Married (Joint Filing) | Married (Separate Filing) | Head of Household |
| 10% | $0 – $11,600 | $0 – $23,200 | $0 – $11,600 | $0 – $16,550 |
| 12% | $11,600 – $47,150 | $23,200 – $94,300 | $11,600 – $47,150 | $16,550 – $63,100 |
| 22% | $47,150 – $100,525 | $94,300 – $201,050 | $47,150 – $100,525 | $63,100 – $100,500 |
| 24% | $100,525 – $191,950 | $201,050 – $383,900 | $100,525 – $191,950 | $100,500 – $191,950 |
| 32% | $191,950 – $243,725 | $383,900 – $487,450 | $191,950 – $243,725 | $191,950 – $243,700 |
| 35% | $243,725 – $609,350 | $487,450 – $731,200 | $231,251 – $365,600 | $243,700 – $609,350 |
| 37% | $609,350+ | $731,200+ | $365,600+ | $609,350+ |
Federal Income Tax Brackets for Tax Year 2023
Below are the federal income tax brackets for 2023 in the U.S., applicable for the 2023 tax year (to be filed by April 15, 2024).
| Federal Income Tax Brackets for Tax Year 2023 | ||||
| Tax Rate | Single | Married (Joint Filing) | Married (Separate Filing) | Head of Household |
| 10% | $0 – $11,000 | $0 – $22,000 | $0 – $11,000 | $0 – $15,700 |
| 12% | $11,001 – $44,725 | $22,001 – $89,450 | $11,001 – $44,725 | $15,701 – $59,850 |
| 22% | $44,726 – $95,375 | $89,451 – $190,750 | $44,726 – $95,375 | $59,851 – $95,350 |
| 24% | $95,376 – $182,100 | $190,751 – $364,200 | $95,376 – $182,100 | $95,351 – $182,100 |
| 32% | $182,101 – $231,250 | $364,201 – $462,500 | $182,101 – $231,250 | $182,101 – $231,250 |
| 35% | $231,251 – $578,125 | $462,501 – $693,750 | $231,251 – $346,875 | $231,251 – $578,100 |
| 37% | $578,126+ | $693,751+ | $346,876+ | $578,101+ |
Key Rules for Federal Taxpayers in the U.S.:
- Only single individuals can choose to file under the single tax bracket.
- Married individuals must file under the married tax bracket. In most cases, joint filing is more advantageous.
- Taxpayers filing under the “Head of Household” bracket must meet specific criteria: bear more than half of household expenses, be unmarried, and have a qualifying child or dependent.
How Do Federal Income Tax Brackets Work?
The U.S. follows a progressive tax system, meaning the tax rate increases as your income rises. This system is implemented through federal income tax brackets.
How Federal Tax Brackets Work:
- Taxable Income: After subtracting deductions and tax credits, the remaining amount is taxable income.
- Bracket Allocation: Taxable income is divided into different brackets, each subject to a specific tax rate.
- Tax Calculation: You pay taxes on each portion of your income that falls within each bracket according to the respective rate.
Factors Affecting Federal Income Tax:
- Tax Brackets and Rates: Adjusted annually to reflect inflation and changes in tax policy.
- Standard Deduction: An amount deducted directly from taxable income before tax is calculated. The standard deduction varies based on filing status (single, married, with children, etc.).
- Other Deductions: Besides the standard deduction, other deductions include mortgage interest, charitable contributions, etc.
- Tax Credits: Amounts subtracted directly from the tax owed, reducing the tax burden.
Understanding the 2024 Federal Income Tax Brackets
Since 2017, thanks to President Donald Trump and the Republican Party’s tax reform, the U.S. federal income tax brackets have been divided into seven levels (as mentioned above).
- Major Changes: Reduced tax rates for five out of seven brackets and nearly doubled the standard deduction.
- Benefit: Reduces the total amount of federal income tax owed.
Standard Deduction for 2024:
- Single: $14,600
- Married (Joint Filing): $29,200
- Single with a Child: $21,900
Note: These figures may change annually. For the most accurate and updated information, please visit the official website of the Internal Revenue Service (IRS).
Tips for Filing Federal Income Taxes
Here are some tips for filing federal income taxes in 2024:
- Gather All Necessary Information:
- All W-2 Forms: These forms summarize your income and the amount of taxes withheld by your employer.
- 1099 Forms: Applicable for other types of income such as investment interest, rental income, or freelance earnings.
- Documents Related to Deductions and Credits: Receipts and invoices for charitable contributions, mortgage interest, medical expenses, etc.
- Social Security Number: This is required to verify your taxpayer identity.
- Choose the Right Tax Filing Method:
- Do-It-Yourself: You can fill out and file your tax return using tax software or online platforms.
- Use a Tax Professional’s Service: If your income is complex or you are not confident in your tax knowledge, seek help from a professional.
- Double-Check Before Submitting:
- Review All Figures: Ensure there are no mistakes in recording your information.
- Use Error-Checking Software: Many tax software programs have automatic error-checking functions.
- Seek a Second Opinion: If you are unsure about anything, ask for advice from family, friends, or experts.
- File Your Taxes on Time:
- Due Date: Typically April 15 each year.
- Extensions: If you cannot file on time, request an extension. However, you still need to pay any taxes owed.
- Keep Records:
- Save All Documents: In case of audits or issues, you need complete records for reference.
- Record Retention Period: According to IRS rules, you should keep tax records for at least three years.
Additionally, to ensure a quick and accurate tax filing process in 2024, taxpayers should:
- Use Tax Software: Tax software helps calculate taxes accurately and quickly.
- Stay Updated on Tax Law Changes: Tax laws can change annually, so keep informed of the latest updates.
- Be Honest in Reporting: Providing false information can lead to severe legal consequences.
Tax Savings with Life Insurance – A Tax-Free Investment and Retirement Accumulation Solution
Currently, there are many ways for Vietnamese immigrants in the U.S. to reduce the amount they owe in personal income tax – federal income tax. However, life insurance remains a top priority due to its safety, protection against risks, and the ability to invest and withdraw funds TAX-FREE.
Here are four tax benefits of participating in life insurance:
- Reduces Taxable Income: Every month, participants spend a certain amount on insurance premiums. This amount can be listed as a deductible expense, reducing taxable income.
- Tax-Free Investment & Retirement Withdrawals: The funds paid into life insurance are invested to generate returns. Unlike 401(k) or Roth IRA, the amount withdrawn from life insurance is not taxed.
- Easier Access to Loans: With an insurance policy, participants can use it to secure loans or access accumulated funds early.
- Protection Against Financial Risks: Part of the insurance premium covers living benefits (compensation for illness or disability) and death benefits (compensation if the participant passes away). Importantly, these benefits are also tax-exempt.
Some life insurance programs offering all these benefits that you should consider include IUL Secrets by National Life Group, Max Funded IUL by Allianz, and Kaizen. These programs are backed by insurance companies with 130 to 175 years of operation. Therefore, you can feel confident putting your money here to accumulate tax-free savings and reduce your 2024 federal income tax as well as taxes in future years.
Above, Thinksmart Insurance has provided information on the 2024 and 2023 federal income tax brackets in the U.S. If you have any questions, please call us at the hotline (678) 722 3447, message us via Messenger, or email Support@Thinksmartinsurance.com for free consultation and 24/7 support.
