Marginal tax rates are one of the most misunderstood financial concepts, and I intend to write more about this in the future. This misunderstanding occasionally leads people to mistakenly believe that earning $1 over the barrier into the next tax level would result in a significantly higher tax bill because all income would be taxed at a higher rate, but that’s not true.
But knowing the brackets will help you plan your tax payments, and the IRS released this information at the end of last year.
Married individuals filing joint returns and surviving spouses
| If Taxable Income Is: | The Tax Is: |
|---|---|
| Not over $16,700 | 10% of the taxable income |
| Over $16,700 but not over $67,900 | $1,670 plus 15% of the excess over $16,700 |
| Over $67,900 but not over $137,050 | $9,350 plus 25% of the excess over $67,900 |
| Over $137,050 but not over $208,850 | $26,637.50 plus 28% of the excess over $137,050 |
| Over $208,850 but not over $372,950 | $46,741.50 plus 33% of the excess over $208,850 |
| Over $372,950 | $100,894.50 plus 35% of the excess over $372,950 |
Heads of households
| If Taxable Income Is: | The Tax Is: |
|---|---|
| Not over $11,950 | 10% of the taxable income |
| Over $11,950 but not over $45,500 | $1,195 plus 15% of the excess over $11,950 |
| Over $45,500 but not over $117,450 | $6,227.50 plus 25% of the excess over $45,500 |
| Over $117,450 but not over $190,200 | $24,215 plus 28% of the excess over $117,450 |
| Over $190,200 but not over $372,950 | $44,585 plus 33% of the excess over $190,200 |
| Over $372,950 | $104,892.50 plus 35% of the excess over $372,950 |
Unmarried individuals (other than surviving spouses and heads of households)
| If Taxable Income Is: | The Tax Is: |
|---|---|
| Not over $8,350 | 10% of the taxable income |
| Over $8,350 but not over $33,950 | $835 plus 15% of the excess over $8,350 |
| Over $33,950 but not over $82,250 | $4,675 plus 25% of the excess over $33,950 |
| Over $82,250 but not over $171,550 | $16,750 plus 28% of the excess over $82,250 |
| Over $171,550 but not over $372,950 | $41,754 plus 33% of the excess over $171,550 |
| Over $372,950 | $108,216 plus 35% of the excess over $372,950 |
Married individuals filing separate returns
| If Taxable Income Is: | The Tax Is: |
|---|---|
| Not over $8,350 | 10% of the taxable income |
| Over $8,350 but not over $33,950 | $835 plus 15% of the excess over $8,350 |
| Over $33,950 but not over $68,525 | $4,675 plus 25% of the excess over $33,950 |
| Over $68,525 but not over $104,425 | $13,318.75 plus 28% of the excess over $68,525 |
| Over $104,425 but not over $186,475 | $23,370.75 plus 33% of the excess over $104,425 |
| Over $186,475 | $50,447.25 plus 35% of the excess over $186,475 |
Updated September 22, 2009 and originally published May 13, 2009. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @flexo on Twitter and visit our Facebook page for more updates.
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{ 1 comment… read it below or add one }
Flexo, I’m not a tax expert but I do know this is a common misconception about taxes. I think part of what causes this confusion is a finance community assuming the public understands this. Not simply bloggers, but TV, tax preparers, magazines, newspapers, and anyone else that discusses taxes.
This system does add complication, but it’s also keeps it fair. It wouldn’t be fair for me to pay thousands more simply because my bonus was $1000 instead of $900.