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Federal Tax Brackets

Your tax bracket is the rate you pay on the "last dollar" you earn; but as a percentage of your income, your tax rate is generally less than that. First, here are the tax rates and the income ranges where they apply:

 

Tax Year:
Filing Status:
If your taxable income is between... your tax bracket is:
and %
and %
and %
and %
and %
and %
and %

To take an example, suppose your taxable income (after deductions and exemptions) is exactly $100,000 in 2012 and your status is Married filing jointly; then your tax would be calculated like this:

($ 17,400   minus   0 )   x .10 :      $   1,740.00
( 70,700   minus   17,400 )   x .15 : 7,995.00
( 100,000   minus   70,700 )   x .25 : 7,325.00
    Total:   $ 17,060.00

This puts you in the 25% tax bracket, since that's the highest rate applied to any of your income; but as a percentage of the whole $100,000, your tax is about 17%.

This next calculator lets you try it out with your own numbers:

Tax Year:
Filing Status:
Taxable Income: $
Tax:$
  ...as a percentage of income: %
Tax Bracket: %

 

Where Tax Brackets Apply

"Taxable Income" above is really Regularly Taxed Income minus Adjustments, Deductions, and Exemptions.

Payroll Tax (Social Security and Medicare), and Qualified Dividends and Long Term Capital Gains are separate calculations.

(See this Tax Calculator for more.)

The obvious way to lower your tax bill is to increase the untaxed area at the bottom of the diagram. Contributions to deductible retirement accounts count as adjustments; mortgage interest and contributions to charity count as deductions.

      Tax brackets apply to regularly taxed income, minus adjustments, deductions, and exemptions

 

Tax Hikes, Tax Cuts

1993 saw a tax hike on the wealthy (via two new brackets at the top), and then 2001 through 2003 saw a series of tax cuts that lowered the tax brackets as follows:

  1992   1993 -
2000
  2001  2002  2003 -
2010
  2011 -
2012
  2013 -
2014
15% 15% 15% 10% 10%Same
as
2010
 
10%
15% 15% 15%
28% 28% 27.5% 27% 25% 25%
31% 31% 30.5% 30% 28% 28%
36% 35.5% 35% 33% 33%
39.6% 39.1% 38.6% 35% 35%
39.6%

From 2000 to 2002 most brackets dropped by one percent, and there was a new low bracket added at the very bottom. In 2003 most brackets got an additional cut of two percent with a 3.6 percent cut at the top. But note that the rich still paid more in 2003, and everybody else paid less, than was the case in 1992. Now if we could just balance the budget...

 

Future Tax Rates: 2013 Changes

All tax cuts since 2000 are due to expire at the end of 2012, which would mean a big tax increase for practically everybody. But nobody seriously expects that to happen; the most likely scenario is a "temporary" extension of the current tax brackets until after the next election cycle in 2014. (You heard it here first!)

Update (1/1/2013): The prediction above wasn't cynical enough, and the politicians really did drop us off "the cliff." Maybe if they spent less time on robocalls and attack ads, and more time doing the nation's business... Never mind, that's crazy talk. Happy New Year!

Update (Later that day): The prediction came true!   (Well, almost: 2012 rates are permanently extended for everyone except singles making over $400K and couples making over $450K.)

 

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Taxes

Tax Calculator
Tax Brackets
Capital Gains
Social Security
 

 

 
Tax Changes for 2013 and 2014

- 2012 rates have been extended for everyone except high income filers.   (See chart, below.)

- Additional changes apply to Social Security and Capital Gains

(See these IRS Publications for 2013 and 2014.)
 

 

 

 
Also See...

Retirement Calculator
Roth IRA Limits
401(k) Calculator
Savings Calculator
Credit Card Calculator
Investment Return
Tax Cuts
 

 

 
Off Site...

IRS
Form 1040 ES
Understanding Taxes