Here's how to find how what tax bracket you're in for 2020
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- You can find your federal tax bracket by applying your taxable income and filing status to the IRS tax tables.
- There are seven tax brackets with rates ranging from 10% to 37%; the income thresholds are updated every year for inflation.
- Your tax bracket applies to only the amount you earn above the minimum income threshold for that bracket. It's also known as your marginal tax rate.
- This post has been reviewed for accuracy by Thomas C. Corley, CPA.
- See our picks for the best tax software »
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 do you know what tax bracket you're in?
How much you owe in income taxes depends on your filing status and, of course, how much you earn.
Below are the federal income tax brackets for this year for single filers, heads of household, and married people who file jointly. These tax rates apply to taxes due in April 2021.
Tax brackets are based on taxable income
Taxable income is your gross income — all earnings not specifically exempt by the IRS, including unemployment compensation — reduced by any deductions you qualify for.
If your taxable income for 2020 is $50,000 as a single filer, that puts you in the 22% tax bracket, because you earn more than $40,125 but less than $85,525. This is known as your marginal tax rate.
But while 22% of $50,000 is $11,000, you're not paying $11,000 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.
How the calculation works for a single taxpayer in 2020
- Figure out your taxable income: gross income minus deduction(s).
- Everyone pays a 10% federal-income tax rate on their first $9,875 of taxable income.
- Everyone pays a 12% federal-income tax rate on their next $9,876 to $40,125 of taxable income.
- Everyone pays a 22% federal-income tax rate on their next $40,126 to $85,525 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 2020 taxes, John would subtract the standard deduction ($12,400) and take zero personal exemptions, since they were eliminated with the GOP tax law.
That makes his taxable income $27,600, putting him in both the 10% and 12% tax brackets.
Here's how to estimate how much he would owe in taxes:
- The first $9,875 of his $27,600 total taxable income is taxed at a 10% rate, yielding $987.50 in taxes.
- Then, his income between $9,875 and $27,600 — a total of $17,725 — is taxed at a 12% rate, yielding $2,127 in taxes.
- So, adding $987.50 to $2,127, John might owe about $3,114 in taxes, rather than the $3,312 he would owe if his entire taxable income were evaluated at the 12% rate.
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