Income Tax Brackets

New Income Tax Brackets For 2019 In Comparison With 2018

Do you think you are too early to plan for your incomes and taxes? We are afraid you may be wrong. You are never too early to plan for your taxes for the coming year. There are basically seven federal tax brackets, they are 10%, 12%, 22%, 24%, 32%, 35% and 37%. There is a change in federal tax brackets for the year 2019 as compared to 2018. Thus to have a complete understanding of tax brackets here is FinanceShed with a complete list of Income Tax Brackets.

Income Tax Bracket For Single/Married Filing Jointly
Tax Rate Taxable Income (Single) Taxable Income (Married Filing Jointly)
2018 2019 2018 2019
10% Up to $9,525 Up to $9,700 Up to $19,050 Up to $19,400
12% $9,526 to $38,700 $9,701 to $39,475 $19,051 to $77,400 $19,401 to $78,950
22% $38,701 to $82,500 $39,476 to $84,200 $77,401 to $165,000 $78,951 to $168,400
24% $82,501 to $157,500 $84,201 to $160,725 $165,001 to $315,000 $168,401 to $321,450
32% $157,501 to $200,000 $160,726 to $204,100 $315,001 to $400,000 $321,451 to $408,200
35% $200,001 to $500,000 $204,101 to $510,300 $400,001 to $600,000 $408,201 to $612,350
37% Over $500,000 Over $510,300 Over $600,000 Over $612,350

Taxpayers generally fall into one of seven brackets, they 10%, 12%, 22%, 24%, 32%, 35% or 37%. They fall in these brackets depending on their income. The U.S. tax system is a progressive tax system. This means that as the income rises, income tax brackets will also higher. If the income is above the maximum limit stated in the said tax bracket, the income will be taxable on the increased amount only and not the whole of the income.

Income Tax Bracket For Married Filing Separately/Head of Household
Tax Rate Taxable Income (Married Filing Separately) Taxable Income (Head of Household)
2018 2019 2018 2019
10% Up to $9,525 Up to $9,700 Up to $13,600 Up to $13,850
12% $9,526 to $38,700 $9,701 to $39,475 $13,601 to $51,800 $13,851 to $52,850
22% $38,701 to $82,500 $39,476 to $84,200 $51,801 to $82,500 $52,851 to $84,200
24% $82,501 to $157,500 $84,201 to $160,725 $82,501 to $157,500 $84,201 to $160,700
32% $157,501 to $200,000 $160,726 to $204,100 $157,501 to $200,000 $160,701 to $204,100
35% $200,001 to $300,000 $204,101 to $306,175 $200,001 to $500,000 $204,101 to $510,300
37% Over $300,000 Over $306,175 Over $500,000 Over $510,300

Also Read:- Revolutionary Shift Towards Economic Stability: Income Tax Rules 2019

How Do These Brackets Work?

Income Tax Brackets

Source: forbes.com

Falling in a particular tax bracket doesn’t mean you pay that federal income tax rate on everything you make. The progressive tax system means that people with higher taxable incomes are subject to higher federal income tax rates, and people with lower taxable incomes are subject to lower federal income tax rates.

The government decides the tax payable by you. This tax liability is decided by dividing your taxable income into tax brackets and each chunk gets taxed at the corresponding tax rate. This simply means that no matter which bracket you’re in, you won’t pay that tax rate on your entire income.

Income Tax Brackets

Source: merchantmaverick.com

The changes here include the indexing method used to adjust the tax brackets for inflation. Previously this was calculated based on the Consumer Price Index. However, it is now calculated based on Chained CPI formula. However, the marriage penalty still is in force.