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...
To take an example, suppose your taxable income (after deductions and exemptions) was exactly $100,000 in 2003 and your status was Married filing separately; then your tax would be calculated like this:
| ( | $ 7,000 - | 0 ) | x .10 : | $ 700 |
| ( | 28,400 - | 7,000 ) | x .15 : | 3,210 |
| ( | 57,325 - | 28,400 ) | x .25 : | 7,231 |
| ( | 87,350 - | 57,325 ) | x .28 : | 8,407 |
| ( | 100,000 - | 87,350 ) | x .33 : | 4,175 |
| Total: | $ 23,723 |
This puts you in the 33% tax bracket; but as a percentage of your income, your tax is about 23.7%.
This next calculator lets you try it out with your own numbers:
(Note that this is just for "regular" income tax, not
capital gains or
payroll tax.
And of course this calculator isn't official - you need to get the real rates from the IRS.)
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 -
2008 |
| 15% | 15% | 15% | 10% | 10% |
| 15% | 15% |
| 28% | 28% | 27.5% | 27% | 25% |
| 31% | 31% | 30.5% | 30% | 28% |
| 36% | 35.5% | 35% | 33% |
| 39.6% | 39.1% | 38.6% | 35% |
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From 2000 to 2002 most brackets dropped by one percent, and there was a new low bracket added for the
"lucky duckies" at the very bottom.
In 2003 most brackets got an additional cut of two percent with a special gift for the "other" lucky duckies, the ones 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...
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