Tax Brackets Explained

In 2017, there are seven tax brackets. Let’s begin with the brackets for single filers.

Tax Bracket Income Range
10% $0 to $9,325
15% $9,325 to $37,950
25% $37,950 to $91,900
28% $91,900 to 191,650
33% 191,650 to $416,700
35% $416,700 to $418,400
39.6% $418,400+

Here are the brackets for married couples filing jointly.

Tax Bracket Income Range
10% $0 to $18,650
15% $18,650 to $75,900
25% $75,900 to $153,100
28% $153,100 to $233,350
35% $233,350 to $416,700
35% $416,700 to $470,700
39.6% $470,700+

We have a single person with a taxable income of $75,000. As the first table shows, our made up friend’s income of $75,000 puts her in the 25% tax bracket. That doesn’t mean she will be taxed 25% of her entire income. She will be taxed 10% ($932.50) on the first $9,325 of her taxable income. On every dollar of taxable income between $9,325 and $37,950, she will be taxed 15% ($5,226.25. )Finally, she will be taxed 25% on each dollar of taxable income between $37,950 and her taxable income of $75,000 ($9,262.50). To figure out her tax bill, we add the tax dollars from her tax brackets together for a total of $14,489.

Her taxable income of $75,000 puts our friend in the 25% tax bracket; however, the bracket structure of our tax code means she owes Uncle Sam roughly 19% of her taxable income.

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