Federal taxes are an important part of the US system of taxation, and understanding them is essential to ensure compliance. This article will provide an overview of federal taxes, including who pays them, when they are due, and how they are calculated. Federal taxes are taxes imposed by the United States government on individuals, businesses, and other entities.

What Is Federal Tax?

The U.S. federal income tax is levied by the Internal Revenue Service (IRS) on the annual earnings of individuals, corporations, trusts, and other legal entities. Federal income taxes apply to all forms of earnings that make up a taxpayer's taxable income, including wages, salaries, commissions, bonuses, tips, investment income, and certain types of unearned income.

How Is Federal Tax Calculated?

In a nutshell, to estimate taxable income, we take gross income and subtract tax deductions. What's left is taxable income. Then we apply the appropriate tax bracket (based on income and filing status) to calculate tax liability.

Who Pays Federal Tax?

Federal income taxes are based on your income and filing status; taxes apply to everyone, regardless of where they live or work. Federal income tax liability can be reduced by tax deductions and tax credits, legislation that provides benefits to specific types of taxpayers.

Tax Brackets

US Tax Brackets for 2022

Tax brackets were created by the IRS to implement America’s “progressive” tax system, which taxes higher levels of income at the progressively higher rates we mentioned earlier. The brackets help determine how much money you need to pay the IRS annually.

Single Taxpayers

2022 Single Filer Tax Brackets


Married Filing Jointly Taxpayers

2022 Married Filing Jointly Tax Brackets


Head of Household Taxpayers

2022 Head of Household Tax Brackets


Tax Benefits


Earned Income Credit

The Earned Income Tax Credit (EITC) helps low- to moderate-income workers and families get a tax break. If you qualify, you can use the credit to reduce the taxes you owe – and maybe increase your refund.

Child Tax Credit


You qualify for the full amount of the 2022 Child Tax Credit for each qualifying child if you meet all eligibility factors and your annual income is not more than $200,000 ($400,000 if filing a joint return). Parents and guardians with higher incomes may be eligible to claim a partial credit.

Deductible Retirement Contributions


For 2022, 2021, 2020 and 2019, the total contributions you make each year to all of your traditional IRAs and Roth IRAs can't be more than: $6,000 ($7,000 if you're age 50 or older), or. If less, your taxable compensation for the year.


  • Taxpayers should understand the different types of taxes they are subject to in order to maximize their deductions and lower their tax burden.
  • It is important to take advantage of tax credits and deductions available to reduce the amount of taxes owed.
  • Understanding the tax brackets and filing status can also help taxpayers save money on their taxes.