Personal Income Tax Bracket
Federal Personal Income Tax is administered by the Internal Revenue Service (IRS) is the largest source of revenue for the U.S. federal government. Nearly all working Americans are required to file a tax return with the IRS each year and most pay taxes throughout the year in the form of payroll taxes that are withheld from their paychecks.
Income taxes in the U.S. are calculated based on tax rates that range from 10% to 39.6%. Taxpayers can lower their tax burden and the amount of taxes they owe by claiming exemptions, deductions and credits. Below, we’ll take a closer look at the most important IRS tax rules to help you understand how your taxes are calculated.
Calculating Income Tax Bracket
The United States has a progressive income tax. This means there are higher tax rates for higher income levels. These are called ‘marginal tax rates” – they do not apply to total income, but only to the income within a specific range.
These ranges are called brackets. Income falling within a specific bracket is taxed at the rate for that bracket. The table below shows the tax brackets for the federal income tax.
View your Personal Income Tax Bracket
The information herein is general in nature and should not be considered legal or tax advice.
Consult an attorney or tax professional regarding your specific situation.
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Tax Brackets Vary Based on Filing Status
You will note that the brackets vary depending on whether you are single, married or the head of household. These different categories are called filing statuses. Married persons can choose to file separately or jointly. While it often makes sense to file jointly, filing separately may be the better choice in certain situations.
Based on the rates in the table above, a single filer with an income of $50,000 would have a top marginal tax rate of 25%.
However, that taxpayer would not pay that rate on all $50,000. The rate on the first $9,225 of taxable income would be 10%, on the next $28,225 would be 15% and on the remaining $12,550 would be 25%. This is because marginal tax rates only apply to income that falls within that specific bracket.