whats the highest tax bracket somebody to have to pay on the lottery

To determine your tax rate, the Internal Acquirement Service (IRS) uses a series of ranges that represent increasingly college amounts of income. These are called tax brackets. For every dollar of income you earn that falls into each bracket, you owe a percentage of that dollar in taxes.

There are 7 taxation brackets, with each range picking upward where the previous range left off. If your income exceeds the range in a lower bracket, the remaining corporeality of income will exist taxed at the charge per unit in the next subclass, and so on. This is called progressive revenue enhancement.

Just the portion of your income that falls into each subclass is taxed at that bracket's taxation charge per unit. The highest subclass your income falls into without exceeding it represents your marginal tax rate. The IRS uses different sets of tax brackets for each type of filing condition, allowing for more income to exist taxed at a lower rate if your filing status qualifies.

There are besides different revenue enhancement rates for capital letter gains as well as for people who are field of study to the alternative minimum tax, which is usually only assessed on certain loftier-internet-worth taxpayers.

How tax brackets make up one's mind your taxes

When you earn an income, you're required to pay taxes on it. Just you lot can reduce your taxable income — the amount of income you lot can exist taxed on — past claiming certain taxation deductions.

Most people merits the standard deduction. For tax year 2021, which y'all'll file your return for in 2022, the standard deduction reduces your taxable income by betwixt $12,550 and $25,100, depending on your filing status. Other taxpayers with a more complicated tax profile may itemize their deductions and potentially deduct even more. For taxation year 2022, the standard deduction will increase to $12,950 for single filers and $25,900 for articulation filers.

Your taxable income is the amount used to make up one's mind which tax brackets you autumn into.

For example, if you earned $100,000 and claim $15,000 in deductions, then your taxable income is $85,000. That $85,000 happens to fall into the first 4 of the seven tax brackets, meaning that portions of it are taxed at different rates.

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Most people already take their taxes withheld from their paychecks by their employer. Other people, such as independent contractors, had to make periodic estimated tax payments based on their income.

When yous file your tax render, y'all'll effigy out if yous paid plenty tax in the previous year or if you paid as well much. The former results in a tax nib for the corporeality yous owe, and the latter results in a tax refund for the amount y'all overpaid.

2021 tax brackets

The 2021 tax brackets indicate how much tax you should pay during the year in 2021. When you file your tax return in 2022, you'll indicate how much you paid, and determine whether you lot're owed a refund or if y'all demand to pay more than.

Filing status in 2021: unmarried

Tax rate	Income range	Total maximum revenue enhancement
You owe x% on every dollar earned betwixt	$0 and $9,950	$995.00
Plus, you owe 12% on every dollar earned betwixt	$9,950 and $40,525	$iv,664.00
Plus, you owe 22% on every dollar earned between	$xl,525 and $86,375	$14,751.00
Plus, yous owe 24% on every dollar earned between	$86,375 and $164,925	$33,603.00
Plus, you owe 32% on every dollar earned between	$164,925 and $209,425	$51,043.00
Plus, you owe 35% on every dollar earned between	$209,425 and $523,600	$162,754.25
Plus, you owe 37% on every dollar higher up	$523,600	$162,754.25 + 37 cents for every dollar of income above $523,600

Filing status in 2021: married filing jointly or qualifying widower

Tax rate	Income range	Total maximum tax
You owe 10% on every dollar earned between	$0 and $19,900	$1,990.00
Plus, you owe 12% on every dollar earned between	$19,900 and $81,050	$nine,328.00
Plus, you owe 22% on every dollar earned between	$81,050 and $172,750	$29,502.00
Plus, you owe 24% on every dollar earned between	$172,750 and $329,850	$67,206.00
Plus, you owe 32% on every dollar earned between	$329,850 and $418,850	$95,686.00
Plus, you owe 35% on every dollar earned between	$418,850 and $628,300	$168,993.l
Plus, yous owe 37% on every dollar above	$628,300	$168,993.50 + 37 cents for every dollar of income above $622,050

Filing status in 2021: married filing separately

Tax rate	Income range	Full maximum revenue enhancement
You owe 10% on every dollar earned between	$0 and $9,950	$995.00
Plus, y'all owe 12% on every dollar earned between	$9,950 and $40,525	$4,664.00
Plus, you lot owe 22% on every dollar earned between	$40,525 and $86,375	$14,751.00
Plus, y'all owe 24% on every dollar earned between	$86,375 and $164,925	$33,603.00
Plus, yous owe 32% on every dollar earned between	$164,925 and $209,425	$51,043.00
Plus, you owe 35% on every dollar earned between	$209,425 and $314,150	$87,696.75
Plus, y'all owe 37% on every dollar above	$314,150	$87,696.75 + 37 cents for every dollar of income above $314,150

Filing condition in 2021: caput of household

Tax rate	Income range	Total maximum revenue enhancement
You lot owe 10% on every dollar earned between	$0 and $14,200	$1,420.00
Plus, you owe 12% on every dollar earned between	$14,200 and $54,200	$six,220.00
Plus, you owe 22% on every dollar earned between	$54,200 and $86,350	$13,293.00
Plus, you owe 24% on every dollar earned betwixt	$86,350 and $164,900	$32,145.00
Plus, y'all owe 32% on every dollar earned betwixt	$164,900 and $209,400	$46,385.00
Plus, you owe 35% on every dollar earned between	$209,400 and $523,600	$156,355.00
Plus, you lot owe 37% on every dollar above	$523,600	$156,355.00 + 37 cents for every dollar of income above $518,400

2022 tax brackets

The 2022 taxation brackets betoken how much tax you should pay during the year in 2022.

Filing status in 2022: single

TAX Rate	INCOME RANGE
ten% on every dollar earned betwixt	$0 and $ten,275
12% on every dollar earned betwixt	$x,275 and $41,775
22% on every dollar earned between	$41,775 and $89,075
24% on every dollar earned between	$89,075 and $170,050
32% on every dollar earned between	$170,050 and $215,950
35% on every dollar earned between	$215,950 and $539,900
37% on every dollar earned higher up	$539,900

Filing status in 2022: married filing jointly or qualifying widower

Tax RATE	INCOME RANGE
10% on every dollar earned between	$0 and $xx,550
12% on every dollar earned between	$xx,550 and $83,550
22% on every dollar earned between	$83,550 and $178,150
24% on every dollar earned between	$178,150 and $340,100
32% on every dollar earned between	$340,100 and $431,900
35% on every dollar earned between	$431,900 and $647,850
37% on every dollar earned above	$647,850

Filing status in 2022: married filing separately

Tax Charge per unit	INCOME RANGE
x% on every dollar earned between	$0 and $10,275
12% on every dollar earned between	$10,275 and $41,775
22% on every dollar earned between	$41,775 and $89,075
24% on every dollar earned betwixt	$89,075 and $170,050
32% on every dollar earned between	$170,050 and $215,950
35% on every dollar earned between	$215,950 and $323,925
37% on every dollar earned above	$323,925

Filing status in 2022: head of household

Revenue enhancement RATE	INCOME RANGE
10% on every dollar earned betwixt	$0 and $14,650
12% on every dollar earned betwixt	$14,650 and $55,900
22% on every dollar earned between	$55,900 and $89,050
24% on every dollar earned between	$89,050 and $170,050
32% on every dollar earned betwixt	$170,050 and $215,950
35% on every dollar earned between	$215,950 and $539,900
37% on every dollar earned above	$539,900

Capital gains taxes

Net capital gains are the corporeality of profit you make after selling an nugget at a higher cost than you paid for it, whether it'south a firm or some cryptocurrency, afterward accounting for net majuscule losses. There are 2 types of majuscule gains: curt-term capital letter gains and long-term capital gains.

Short-term capital gains upshot from an nugget you sold subsequently owning it for less than one year. Brusk-term capital gains are taxed the aforementioned way equally your usual taxes, using the tax brackets relevant to your filing status as if the gains were regular income.

Long-term uppercase gains issue from an asset you sold subsequently owning it for more than than one twelvemonth. Using a different set of taxation brackets, the IRS taxes these net capital gains at much more than favorable rates that ordinary income.

Read our complete guide to majuscule gains taxes.

2021 capital gains revenue enhancement rates

Taxes you'll pay in 2021, to be filed on your 2022 tax return.

Note that you only accept to pay capital gains taxes on realized gains, which is the value you receive afterwards selling or exchanging an asset. If you hold onto an asset and information technology increases in value, simply you don't sell it, and so the asset's new value is considered an unrealized proceeds and isn't subject to tax.

2021 upper-case letter gains taxation rates

Revenue enhancement rate	Single tax filers	Married filing jointly	Head of household	Married filing separately
0%	Upward to $forty,400	Up to $lxxx,800	Up top $54,100	Up to $40,400
15%	$40,400 to $445,850	$lxxx,800 to $500,600	$54,100 to $473,750	$forty,400 to $250,800
20%	More than $445,850	More $500,600	More than than $473,750	More than $250,800

2022 capital gains tax rates

Tax rate	Single tax filers	Married filing jointly	Caput of household	Married filing separately
0%	Up to $41,675	Up to $83,350	Upwards top $55,800	Up to $41,675
15%	$41,675 to $459,750	$83,350 to $517,200	$55,800 to $488,500	$40,000 to $258,600
20%	More than $459,750	More than $517,200	More than $488,500	More $258,600

Capital losses

Capital losses occur when you sell an asset for less than yous paid for it. You can deduct upwards to $3,000 of a upper-case letter loss per twelvemonth (or $1,500 if your filing status is married filing separately) from your taxable income. If a capital loss exceeds the $iii,000 deduction, you can conduct over the excess amount and deduct it the side by side year, and then on until you've deducted the total amount of the capital loss.

Dividends

Dividends are payments companies brand to their shareholders. Even if y'all own simply a little bit of stock, you may exist paid a dividend. Dividends are taxed at the aforementioned rate as short-term capital gains.

Getting taxed on a bonus

Bonuses are non taxed differently than ordinary income. However, your bonus may announced to be taxed at a higher rate when you first receive information technology. That's because bonuses are considered supplemental wages, which include everything from commissions to overtime to prizes from your employer. Supplemental wages are subject to a different set of withholding rules than those that apply to your regular wages.

For the nigh role, supplemental wages are taxed at a flat 22%, downwardly from 25% in years prior to 2018. Just when you file your tax render, the bonus is counted forth with the sum total of all your income that yr. If the 22% revenue enhancement charge per unit resulted in you paying too much tax, part of it could be refunded to you after y'all file.

Extra income from a bonus can get a long way. We recommend putting as much as you can in a high-yield savings business relationship to save for a rainy-solar day fund or emergency (such as an unexpectedly high tax beak).

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Revenue enhancement brackets and the union penalty

When people get married, their combined income would put them over the taxation brackets they were in when single. Because of this, the IRS uses a separate gear up of taxation brackets for married couples filing joint returns that allows college levels of combined income to be taxed at lower rates.

This revenue enhancement benefit works really well for couples at different levels of income. If yous earn $250,000 per twelvemonth and your spouse earns $50,000 per year, if y'all file a articulation return and so your marginal tax rate for $300,000 of combined income is just 24%. It would've been 35% if yous'd filed as an individual. See the rates tax brackets for each filing condition to a higher place.

Just if couples earn the aforementioned level of income, in some cases they may pay a then-chosen spousal relationship punishment. The marriage penalty isn't a real penalty; it'southward a quirk of the progressive revenue enhancement system that occurs when each spouse is individually in the same marginal revenue enhancement bracket and combining their income pushes them into the next highest bracket.

The Tax Cuts and Jobs Act mostly mitigated the marriage penalty. That's considering the maximum levels of income for married couples filing jointly in each tax bracket are at present double the levels for individuals.

Culling minimum tax rate

Many wealthier individuals are able to take advantage of tax deductions that simply don't apply to individuals with lower incomes. That means many wealthy people could pay a much lower tax rate equally a proportion of their income than less-wealthy people.

For that reason, the IRS uses a special rule called the culling minimum taxation (AMT) for people who earn higher up a certain income. The upshot of the AMT is to oblige people who merits a lot of personal allowances to pay at least a minimum amount of revenue enhancement.

In result, two income calculations are run: i with all your usual deductions applied, and another that removes most deductions from the calculation and applies an exemption -- the AMT exemption -- instead. If your tax rate under the second calculation is higher, then you have to pay the AMT on the amount of income in backlog of the first adding.

If yous're subject to the AMT, you have to pay it in add-on to your regular taxation. Because of this, the AMT rate is usually lower than your marginal tax charge per unit at like levels of income.

Will I pay the AMT in 2021?

To determine whether y'all pay the AMT, the IRS showtime calculates your tentative minimum tax, which is based on your income minus the AMT exemption, before whatsoever deductions are practical.

In 2021, the AMT exemption for individuals is:

$57,300 for people with filing status married filing separately
$73,600 for people with filing status single or caput of household
$114,600 for people with filing condition married filing jointly or qualifying widower

In 2022, the AMT exemption for individuals will be:

$59,050 for people with filing status married filing separately
$75,900 for people with filing condition single or caput of household
$118,100 for people with filing condition married filing jointly or qualifying widower

If you owe more using the tentative minimum tax calculation than the regular tax adding (which includes your usual deductions, but not the AMT exemption), and then you have to pay AMT on the excess.

Employ the post-obit table to determine your taxation rate according to the AMT. The income ranges represent your income minus the AMT exemption plus a handful of AMT-specific tax deductions.

AMT rates for 2021

For all filing statuses except married filing separately.

Taxation rate	Income range
Yous owe 26% on every dollar earned between	$0 and $199,900
Plus, you lot owe 28% on every dollar earned above	$199,900

For filing status married filing separately.

Taxation rate	Income range
You owe 26% on every dollar earned between	$0 and $99,950
Plus, yous owe 28% on every dollar earned above	$99,950

AMT rates for 2022