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Accounting Information > Income Taxes > Income Tax Rates

Income Tax Rates

             Income tax rates vary based on your filing status and the amount of your taxable income.  The most favorable rates are for taxpayers who are married filing jointly or qualifying widows or widowers.  The least favorable rates apply to taxpayers who are married filing separately.

             There are six tax brackets: 10%, 15%, 25%, 28%, 33%, and 35%.  The 10% tax rate is applied to taxable income up to $7,825 for the filing statuses of married filing separately and single, $11,200 for head of household, and $15,650 for married filing jointly and qualifying widow or widower.  The 15% tax rate is for taxable income up to $31,850 for married filing separately and single, $42,650 for head of household, and $63,700 for married filing jointly and qualifying widow or widower.  The 25% tax rate applies to taxable income up to $64,250 for married filing separately, $77,100 for single, $110,100 for head of household, and $128,500 for married filing jointly and qualifying widow or widower.  The 28% tax rate is for taxable income up to $97,925 for married filing separately, $160,850 for single, $178,350 for head of household, and $195,850 for married filing jointly and qualifying widow or widower.  The 33% rate is for taxable income up to $174,850 for married filing separately, and $349,700 for single, head of household, married filing jointly, and qualifying widow or widower.  The 35% tax rate is reserved for taxable income over $174,850 for married filing separately, and $349,700 for single, head of household, married filing jointly, and qualifying widow or widower.

 

             Qualified dividends and net capital gains are usually taxed at a lower rate than the tax bracket that applies to your ordinary income.  The tax rate for qualified dividends is either 5% or 15%, based on your top tax bracket.  Net capital gains are also usually taxed at either 5% or 15%, also based on your top tax bracket.  However, the rate could be higher for net capital gains if you had 28% rate gains or un-recaptured Section 1250 gains.

             When completing your income tax return, to determine your tax, you will probably either find your tax using the Tax Table, which is found in the instructions for Form 1040, or compute your tax using the Tax Computation Worksheet.  The Qualified Dividends and Capital Gain Tax Worksheet or Schedule D Tax Worksheet would be used if the taxpayer has qualified dividends or net capital gains.

             Some taxpayers are required to report alternative minimum tax (AMT) using Form 6251.  These taxpayers would use a rate of 26% or 28% with their AMT taxable income, while still using the favorable tax rates for net capital gains and qualified dividends.

             If you need help with figuring out your income taxes, including which schedules you might need to file and which expenses are allowed as deductions, you are in the right place.  Try out the CPA search feature on this website to find a qualified professional in your area to assist you with all your tax and accounting needs.

 
 
 
 
 
 
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