- How much you pay in federal income taxes depends, in part, on what tax bracket you fall into.
- There are seven tax brackets with tax rates ranging from 10% to 37%.
- Your tax bracket applies to only the amount you earn above the minimum income threshold for that bracket. For income below that limit, you pay the same amount of federal income taxes as everyone else, even if they earn less overall.
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America operates on a progressive tax system. That means as a person earns more and progresses through tax brackets, their income tax rate increases for each level of income.
President Donald Trump’s tax plan went into effect in January 2018, mandating new income tax brackets for nearly all American taxpayers. There are seven federal income tax brackets in total, which are adjusted each year for inflation.
How much you pay in income taxes depends on several factors, including whether you’re single or married, and, of course, how much you earn. Below are the federal income tax brackets for income earned in 2019. Tax day 2020 — when taxes are due — is Wednesday, April 15.
If you earn $40,000 a year as a single filer, that puts you in the 22% tax bracket in 2019 — but while 22% of $40,000 is $8,800, you’re not paying $8,800 in taxes.
Your tax bracket applies to only the amount you earn above the minimum income threshold for that bracket. For income below that limit, you pay the same amount of federal income taxes as everyone else, even if they earn less overall.
Here’s how the calculation works for a single taxpayer in 2019:
- Figure out your taxable income: annual salary minus deduction(s).
- Everyone pays a 10% federal-income tax rate on their first $9,700 of taxable income.
- Everyone pays a 12% federal-income tax rate on their next $9,701 to $39,475 of taxable income.
- Everyone pays a 22% federal-income tax rate on their next $39,476 to $84,200 of taxable income.
- And so on and so forth.
One notable thing about this kind of tax setup is that the amount of taxes owed by someone steadily increases as that person’s amount of income increases. It’s not a monumental change when people jump from one tax bracket to another.
Let’s run through how this would work for an imaginary person: John, who earns $40,000. To keep it simple, let’s say he makes all his money from his work salary and has no dependents.
For his 2019 taxes, John would subtract the standard deduction ($12,200) and take zero personal exemptions, since they were eliminated with the GOP tax law.
That makes his taxable income $27,800, putting him in the 12% tax bracket.
Here’s how to estimate how much he would owe in taxes:
- The first $9,700 of his $27,800 total taxable income is taxed at a 10% rate, yielding $970 in taxes.
- Then, his income between $9,700 and $27,800 — a total of $18,100 — is taxed at a 12% rate, yielding $2,172 in taxes.
- So, adding $970 to $2,172, John might owe about $3,141 in taxes, rather than the $3,336 he would owe if his entire taxable income were evaluated at the 12% rate.