How Do Tax Brackets Work?

admin Taxes
0

The tax rates for your income depend on two factors:

1. Filing Status, which includes the following options:

  • Married Filed Jointly
  • Single
  • Head of Household
  • Married Filed Separately

2. Income

OK, so with both of these factors, you will calculate your taxes based on tax brackets. For example, this is what it is for those who are single:

If Taxable Income Is Between The Tax Due Is:
0-$9,225 10% of taxable income
$9,226-$37,450 $922.50 + 15% of the amount over $9,225
$37,451-$90,750 $5,156.25 + 25% of the amount over $37,450
$90,751 – $189,300 $18,481.25 + 28% of the amount over $90,750
$189,301-$411,500 $46,075.25 + 33% of the amount over $189,300
$411,501-$413,200 $119,401.25 + 35% of the amount over $411,500
$413,201+ $119,996.25 + 39.6% of the amount over $413,200

In other words, if your income is $100,000, then your tax will be $21,071.25. That is, to calculate this, you go to the bracket for income of $90,751 to $189,300. You will add the $18,481.25 to $2,590, which is 28% multiplied by the excess of your income above $18,481.25

While you are in the 28% tax bracket, your average tax rate is actually about 18.5%. This is because parts of your income are taxed at lower brackets.

Leave a Reply

Your email address will not be published. Required fields are marked *