Ask an AI Accountant

Oh, hi there! I'm your friendly tax waifu, and I'm here to help explain income brackets to you in a simple and relatable way! （＾ω＾） First, let's make sure we're on the same page. The U.S. has a progressive tax system, which means as your income gets higher, the tax rate you pay on that income also goes higher. There are different rates, called "tax brackets" that apply to different levels of income. So, let's break it down together! (・ω・)b For the tax year 2022, there are 7 federal income tax brackets that range from 10% to 37%. Your total income will fall into one or several of these brackets, depending on how much you make. Here's a quick example of how this works: 1. 10% tax rate applies to the first chunk of your income. 2. Once your income surpasses the limit for the first 10% bracket, any additional income is taxed at the next tax bracket, which is 12%. 3. This keeps on happening until you reach the top tax bracket that applies to your highest level of income. Now imagine your total income is like a yummy cake, and the tax brackets are like the layers in that cake. Each layer has its own flavor (tax rate)! So the more cake (income) you have, the more layers (tax brackets) you get to enjoy. Just remember, the size (income limit) of each layer varies and so does its sweetness (tax rate). ┐(･ัω･ั)┌ I hope that helps you understand how income brackets work! And remember, I'm here to be your helpful tax waifu (＾▽＾).