How much do you have to make to owe taxes at the end of the year?

When tax season rolls around, a lot of people ask the same thing: How much do you have to owe taxes at the end of the year?

It’s a valid question. Unfortunately, the answer isn’t a simple number. It depends on a few things, like your income, filing status, and how tax brackets work.

Let’s break it all down.

Tax brackets defined

A tax bracket represents a specific range of earnings that are taxed at a particular rate. 

The U.S. has a progressive tax system, which means the more you earn, the higher your tax rate gets. But you don’t pay that higher rate on all your income, just the part that falls within that bracket.

Think of it like steps on a staircase. Each step has a higher rate, but you only pay that rate on the income that lands on that step.

How do tax brackets work?

You’re not taxed at one flat rate. You’ll pay varying rates on different segments of your earnings.

Let’s say you’re a single filer making $50,000. In 2025, you might fall into three different tax brackets.

The first chunk of your income is taxed at 10%, the next chunk at 12%, and the rest at 22%. So even though your top tax bracket is 22%, your effective tax rate (what you actually pay on average) is lower.

This method helps make taxes a little fairer. It also means earning more doesn’t suddenly cost you more than you made.

Why do tax brackets change every year?

The IRS adjusts tax brackets every year to account for inflation. That prevents what’s known as ‘bracket creep,’ where rising wages push people into higher tax brackets even though their buying power hasn’t increased.

So, while the percentage rates (like 10%, 12%, 22%) might stay the same, the income ranges they apply to change slightly each year.

Income tax thresholds: What are the federal income tax brackets for 2025?

For the 2025 tax year (which you’ll file in 2026), here are the projected federal income tax brackets for different types of filers:

What are the federal income tax brackets for 2026?

The 2026 tax year could look a little different. That’s because the Tax Cuts and Jobs Act (TCJA), passed in 2017, is set to expire at the end of 2025. If Congress does nothing, tax rates and brackets will revert to pre-2018 levels.

Here’s what that means in layman’s terms: Taxes will likely go up for most people. According to the Tax Foundation, individual income tax could increase as much as 62%.

Nothing’s confirmed yet, but it’s something to watch if you’re doing long-term planning. Keep an eye on Congress and updates from the IRS.

How to calculate how much you owe in taxes using tax brackets

Let’s calculate how much you owe in taxes using the tax brackets. Here’s an example:

You’re a single filer making $60,000 in taxable income in 2025. Let’s break it down:

1. The first $11,325 is taxed at 10% = $1,132.50
2. The next $33,924 (from $11,326 to $45,250) is taxed at 12% = $4,070.88
3. The remaining $14,749 (from $45,251 to $60,000) is taxed at 22% = $3,244.78

Total tax: $1,132.50 + $4,070.88 + $3,244.78 = $8,448.16

Even though your highest bracket is 22%, you’re only paying that on a portion of your income. Your effective tax rate is about 14%.

If your employer withheld that much or more throughout the year, you might owe nothing. If they withheld less, you could owe the difference.

Inflation adjustments to be aware of

Every year, the IRS makes small changes to the tax code based on inflation. These include:

1. Standard deduction increases

The standard deduction is the portion of your income the IRS lets you exclude from taxes. No paperwork needed. It’s the simplest way to reduce your taxable income, and it usually increases every year to reflect inflation.

For the 2025 tax year (the one you file in 2026), the standard deductions are projected to be:

• $15,000 for single filers
• $30,200 for married couples filing jointly
• $22,500 for heads of household

These amounts are slightly higher than in 2024, which is good news if you don’t itemize deductions. A higher standard deduction means more of your income stays untaxed.

2. Tax bracket range shifts

While the tax rates themselves don’t usually change year to year, the income ranges they apply to do. This is done to prevent something called bracket creep.

Without inflation adjustments, you’d get taxed more just for keeping up with rising costs. The IRS avoids this by expanding the income thresholds each year.

So even if you get a raise, you might still stay in the same tax bracket, or at least not jump up as quickly as you’d expect.

3. Retirement account contribution limits

One of the best ways to reduce your taxable income is to contribute to tax-advantaged retirement accounts like a 401(k) or an IRA. And just like tax brackets, these contribution limits usually rise with inflation.

Here are the projected limits for 2025:

• 401(k): Up to $23,500 for those under 50; $31,500 if you’re 50 or older (includes catch-up contributions).
• IRA: Up to $7,000 for those under 50; $8,000 if you’re 50 or older.

These increases give you more room to save for retirement while reducing your taxable income in the present.

4. Earned Income Tax Credit (EITC) adjustments

The EITC is designed to support low-to-moderate income earners, especially those with children. The amount you can claim and the income limits to qualify are adjusted each year.

For 2025, the maximum EITC benefit for a family with three or more children is projected to be over $8,046, while the income cap to qualify will also increase slightly. These changes ensure the credit keeps pace with inflation and continues to offer meaningful support.

5. Gift tax and estate tax exemptions

These may not affect everyone, but if you’re gifting money or planning an estate, the annual and lifetime exemptions also adjust.

• In 2025, the annual gift tax exclusion is projected to rise to $19,000 per recipient.
• The lifetime estate tax exemption is expected to increase to just under $13.99 million per person (double that for married couples).

These adjustments let high-net-worth individuals pass on more wealth without incurring federal gift or estate taxes.

How to owe nothing with your federal tax return

While it’s not always possible, there are practical ways to legally reduce your tax bill to zero (or even get a refund).

Let’s break down a few strategies that actually work:

Maximize deductions

Everyone gets a standard deduction, but if your qualified expenses are high, itemizing may give you a bigger benefit. Think mortgage interest, charitable donations, and large medical bills.

For 2025, the standard deduction is projected to be $14,600 for single filers and $29,200 for married couples filing jointly. If your itemized deductions beat those numbers, use them instead.

Contribute to retirement accounts

Contributions to a traditional 401(k) or IRA come out of your taxable income. That lowers the amount the IRS taxes you on.

In 2025, you can put in up to $23,000 into a 401(k) if you’re under 50. If you’re 50 or older, you can add an extra $7,500, bringing the total to $30,500. IRAs have lower limits, but they help, too.

Use tax credits

Unlike deductions (which lower your taxable income), tax credits directly reduce what you owe. They’re more powerful.

The Earned Income Tax Credit (EITC), Child Tax Credit, and American Opportunity Tax Credit (AOTC) are some of the most common.

Some credits are even refundable, meaning if they bring your tax bill below zero, you get money back.

Adjust your withholdings

If you consistently owe taxes or get big refunds, your withholding probably needs fixing.

Use the IRS Tax Withholding Estimator to update your W-4 and get closer to breaking even. The goal is to neither owe nor get a massive refund. Just balance it out.

Harvest tax losses

If you invest in stocks or crypto, this one matters. Selling assets at a loss can offset your gains and reduce your tax bill.

Even if you didn’t make much profit, harvesting losses can reduce taxable income and even roll into future years if unused.

Use Flexible Spending Accounts (FSAs) and Health Savings Accounts (HSAs)

These accounts let you pay for healthcare with pre-tax money. That means you’re spending before taxes hit your pay.

HSAs in particular are triple-tax-advantaged: contributions are pre-tax, growth is tax-free, and withdrawals for medical expenses are tax-free too.