Taxes feel complicated because the system is complicated. But the basics? Actually pretty simple.
"I avoided learning about taxes for years. Then I realized I was probably overpaying. Understanding the basics helped me keep an extra $1,200 one year just by adjusting my W-4."
How Income Tax Works
You don't pay the same rate on all your income. We use "tax brackets"—different rates for different portions of your income.
2024 Tax Brackets (Single Filers)
| Income Range | Tax Rate |
|---|---|
| $0 - $11,600 | 10% |
| $11,601 - $47,150 | 12% |
| $47,151 - $100,525 | 22% |
| $100,526 - $191,950 | 24% |
| $191,951 - $243,725 | 32% |
| $243,726 - $609,350 | 35% |
| $609,351+ | 37% |
The Bracket Myth
Watch Out
"I don't want a raise—it'll put me in a higher " is NOT how it works.
Only the money IN that bracket gets taxed at that rate.
Example: You earn $50,000
- First $11,600 taxed at 10% = $1,160
- Next $35,549 taxed at 12% = $4,266
- Remaining $2,851 taxed at 22% = $627
- Total tax: $6,053 (effective rate: ~12%)
A raise always means more money in your pocket.
Key Tax Terms
| Term | What It Means |
|---|---|
| Total earnings before anything | |
| Adjusted (AGI) | Gross minus certain deductions |
| Taxable income | What you actually pay taxes on |
| Reduces tax dollar-for-dollar (best) | |
| Reduces taxable income (still good) | |
| Tax taken from each paycheck | |
| Refund | You overpaid; getting it back |
| Owed | You underpaid; gotta pay the difference |
Deductions: Standard vs. Itemized
You get to reduce your taxable income. Two options:
(2024):
- Single: $14,600
- Married filing jointly: $29,200
Itemized Deductions:
- interest
- State/local taxes (capped at $10,000)
- Charitable donations
- Medical expenses (above 7.5% of income)
Pro Tip
About 90% of people take the standard deduction. It's simpler and usually better unless you have a mortgage and live in a high-tax state.
The W-4: Getting Withholding Right
Your W-4 tells your employer how much tax to withhold. Get it wrong and you'll either:
- Get a big refund (you gave the government an interest-free loan)
- Owe money (you might face penalties)
Do This
Use the IRS withholding calculator at irs.gov after any life change:
- New job
- Marriage/divorce
- Having kids
- Buying a home
Filing Your Taxes
You have until April 15 to file (or file an extension).
Free filing options:
- IRS Free File (income under ~$79,000)
- Cash App Taxes (free for most situations)
- VITA (Volunteer Income Tax Assistance) at libraries
Quick Win
If you've never filed taxes, start with IRS Free File or VITA. Don't pay for software until your situation gets complex (investments, business income, rentals).