There are seven tax brackets for most ordinary income: 10 percent, 12 percent, 22 percent, 24 percent, 32 percent, 35 percent and 37 percent. The U.S. has a progressive tax system, which means that as you move up the pay scale, you also move up the tax scale.
Your tax bracket depends on your taxable income and your filing status: single, married filing jointly or qualifying widow(er), married filing separately, and head of household. The deadline to file taxes is April 15, unless that date falls on a weekend or holiday or you get an extension. Filing late can result in penalties and interest charges.
2019 federal income tax brackets
| Tax rate | Single | Head of household | Married filing jointly or qualifying widow | Married filing separately |
|---|---|---|---|---|
| Source: IRS | ||||
| 10% | $0 to $9,700 | $0 to $13,850 | $0 to $19,400 | $0 to $9,700 |
| 12% | $9,701 to $39,475 | $13,851 to $52,850 | $19,401 to $78,950 | $9,701 to $39,475 |
| 22% | $39,476 to $84,200 | $52,851 to $84,200 | $78,951 to $168,400 | $39,476 to $84,200 |
| 24% | $84,201 to $160,725 | $84,201 to $160,700 | $168,401 to $321,450 | $84,201 to $160,725 |
| 32% | $160,726 to $204,100 | $160,701 to $204,100 | $321,451 to $408,200 | $160,726 to $204,100 |
| 35% | $204,101 to $510,300 | $204,101 to $510,300 | $408,201 to $612,350 | $204,101 to $306,175 |
| 37% | $510,301 or more | $510,301 or more | $612,351 or more | $306,176 or more |
2020 federal income tax brackets
| Tax rate | Single | Head of household | Married filing jointly or qualifying widow | Married filing separately |
|---|---|---|---|---|
| Source: IRS | ||||
| 10% | $0 to $9,875 | $0 to $14,100 | $0 to $19,750 | $0 to $9,875 |
| 12% | $9,876 to $40,125 | $14,101 to $53,700 | $19,751 to $80,250 | $9,876 to $40,125 |
| 22% | $40,126 to $85,525 | $53,701 to $85,500 | $80,251 to $171,050 | $40,126 to $85,525 |
| 24% | $85,526 to $163,300 | $85,501 to $163,300 | $171,051 to $326,600 | $85,526 to $163,300 |
| 32% | $163,301 to $207,350 | $163,301 to $207,350 | $326,601 to $414,700 | $163,301 to $207,350 |
| 35% | $207,351 to $518,400 | $207,351 to $518,400 | $414,701 to $622,050 | $207,351 to $311,025 |
| 37% | $518,401 or more | $518,401 or more | $622,051 or more | $311,026 or more |
How do federal tax brackets work?
Tax brackets are not as intuitive as they seem because most taxpayers have to look at more than one bracket to know their tax rate.
Let’s use the tax bracket for 2019 and say your filing status is single and you earned $70,000. You would pay 10 percent on the first $9,700 of your earnings ($970); then 12 percent on the chunk of earnings from $9,701 to $39,475 ($3,573); and then 22 percent on the remaining income, up to $80,000 ($8,916).
Your total tax bill would be $13,459. Divide that by your earnings of $80,000 and you get an effective tax rate of 16.8 percent, which is lower than the 22 percent bracket you’re in.
The brackets below show the tax rates for 2019 and 2020. The brackets are adjusted each year for inflation.
How to get into a lower tax bracket
There are basically two ways to get into a lower tax bracket: tax credits and tax deductions.
Tax credits are a dollar-for-dollar reduction in your income tax bill. If you have a $2,000 tax bill but are eligible for $500 in tax credits, your bill drops to $1,500.
Tax credits can save you more in taxes than deductions. There are tax credits for a variety of things. The federal government gives tax credits for the cost of buying solar panels for your house and to offset the cost of adopting a child. There are education tax credits and tax credits for the cost of child care and dependent care, to name a few. Many states also offer tax credits.
While tax credits reduce your actual tax bill, tax deductions reduce the amount of your income that is taxable. If you have enough deductions to exceed the standard deduction for your filing status, you can itemize those expenses to lower your taxable income. For example, if your medical expenses exceeded 7.5 percent of your adjusted gross income in 2019, you can claim those and lower your taxable income.
Tax brackets and the new tax law
The Tax Cuts and Jobs Act that went into effect on Jan. 1, 2018, retained seven tax brackets but lowered some of the tax rates and raised some of the income thresholds for those rates. The highest earners now pay 37 percent instead of 39.6 percent. And taxpayers can earn more before they break into the highest tax bracket.
The new law also nearly doubled the standard deductions. With much higher standard deductions, fewer people will itemize. The standard deductions for each filing status for 2019 are:
- Single: $12,200
- Head of household: $18,350
- Married filing separately: $12,200
- Married filing jointly: $24,400
- Qualifying widow(er): $24,400
The Tax Cuts and Jobs Act overhauled the tax code, resulting in many changes — some that save taxpayers money, others that raise their taxes. One big change, especially for people in high-tax states, is the $10,000 cap on the amount of state and local property tax, income tax and sales tax that can be deducted. Those taxes were almost fully deductible before.
The new law also hits people with high mortgage debt a little harder. The amount of mortgage debt on which the interest is tax-deductible is reduced from $1 million to $750,000.
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