The federal tax system in the United States is progressive, which means it is based on one's ability to pay. It is set up so that higher-income earners pay a higher percentage than lower-income earners. These percentages are then divided into seven tax brackets, each with a different tax rate that applies to various income levels. The income ranges adjust annually to keep up with inflation, and the brackets and rates can change as a result of legislation on a regular basis. In this article, we'll look at how those tax rates and brackets changed over the course of the decade from 2011 to 2020.
Important Points to Remember
- After tax deductions and adjustments to income, the remaining portion of an individual's overall income determines a tax bracket and its corresponding tax rate in the United States.
- The income ranges that apply to each bracket differ depending on the filing status of the taxpayer.
- Annually, income ranges are adjusted to keep up with inflation (usually by a small amount each year), but only legislation can change the percentage rate that applies to each bracket.
- The number of federal tax brackets has increased from six to seven over the years, but the lowest rate has always been 10%.
How to Make the Most of Tax Bracket and Rate Information
Tax rates and brackets are divided into two categories that are frequently misunderstood: average and marginal tax rates. Your average tax rate is the amount of money you pay in taxes as a percentage of your total income. Let's say you have a taxable income of $50,000 and owe the federal government $6,000 in taxes. Your average tax rate would be 12% ($6,000 divided by $50,000 equals.12, or 12 percent). That isn't to say that each and every one of those $50,000 dollars is taxed at a rate of 12 percent. Your marginal tax rate, on the other hand, is the tax rate that is applied to your highest-earning dollars. In the 2021 tax year, the first $9,950 of your taxable income would be taxed at a rate of 10%, followed by a rate of 12 percent on income from $9,951 to $40,525. Only the remaining $9,475 would be taxed at your marginal rate of 22 percent. Note that a taxpayer's average tax rate will almost always be lower than their marginal tax rate.2020 Tax Brackets and Rates
Single Married Filing Jointly Head of Household 10% $0 to $9,875 $0 to $19,750 $0 to $14,100 12% $9,876 to $40,125 $19,751 to $80,250 $14,101 to $53,700 22% $40,126 to $85,525 $80,251 to $171,050 $53,701 to $85,500 24% $85,526 to $163,300 $171,051 to $326,600 $85,501 to $163,300 32% $163,301 to $207,350 $326,601 to $414,700 $163,301 to $207,350 35% $207,351 to $518,400 $414,701 to $622,050 $207,351 to $518,400 37% More than $518,400 More than $622,050 More than $518,400 Important: As previously stated, each tax bracket's income thresholds are adjusted annually. According to your filing status (single, married filing jointly, married filing separately, head of household, or qualified widow(er) with a dependent child), the income thresholds for each tax bracket are established annually. Single, married filing jointly, and head of household are the most common filing statuses. The same tax rates and brackets apply to taxpayers who qualify for qualifying widow(er) status as those who are married and file joint returns. Up to a point, married taxpayers who file separate returns are subject to the same rates and brackets as single filers. They earn $311,025, which puts them in the top 37 percent of earners. At least in the lower brackets, the thresholds for married taxpayers filing joint returns are effectively double those for single filers. This allows for the possibility of two earners. At higher income levels, the disparity narrows slightly. Similarly, the tax brackets for those who qualify for head of household filing status are higher than those for single filers. When someone qualifies as head of household, they must be unmarried, pay more than half of their household's expenses, and support at least one dependent.2019 Tax Brackets and Rates
Single Married Filing Jointly Head of Household 10% $0 to $9,700 $0 to $19,400 $0 to $13,850 12% $9,701 to $39,475 $19,401 to $78,950 $13,851 to $52,850 22% $39,476 to $84,200 $78,951 to $168,400 $52,851 to $84,200 24% $84,201 to $160,725 $168,401 to $321,450 $84,201 to $160,700 32% $160,726 to $204,100 $321,451 to $408,200 $160,701 to $204,100 35% $204,101 to $510,300 $408,201 to $612,350 $204,101 to $510,300 37% More than $510,300 More than $612,350 More than $510,300 Continuing with the $50,000 in taxable earnings example, you would have been in the 22 percent tax bracket as a single filer in 2019. You would not, however, have paid 22% on the entire $50,000. You would have paid 10% on your income up to $9,700 in that year and then 12% on your income from $9,701 to $39,475. Only $10,525 of your income would have been taxed at 22 percent, with the difference between $50,000 and the top dollar falling into the 12 percent bracket.2018 Tax Brackets and Rates
Single Married Filing Jointly Head of Household 10% $0 to $9,525 $0 to $19,050 $0 to $13,600 12% $9,526 to $38,700 $19,051 to $77,400 $13,601 to $51,800 22% $38,701 to $82,500 $77,401 to $165,000 $51,801 to $82,500 24% $82,501 to $157,500 $165,001 to $315,000 $82,501 to $157,500 32% $157,501 to $200,000 $315,001 to $400,000 $157,501 to $200,000 35% $200,001 to $500,000 $400,001 to $600,000 $200,001 to $500,000 37% More than $500,000 More than $600,000 More than $500,000 The Tax Cuts and Jobs Act (TCJA) was signed into law in December 2017, with the majority of its provisions taking effect in 2018. The tax rates were changed as a result of this legislation, with the majority of them being reduced. As a result, most people paid lower taxes in 2018 than in previous years. Alimony was one of the notable changes that occurred. Prior to this year, the spouse who received alimony was taxed on it. The amount paid could be deducted from the paying spouse's income. For divorces that were finalized after December 31, 2018, alimony began contributing to the receiving spouse's taxable income. As a result, 2018 was the final year in which receiving spouses could avoid paying this tax. Since then, alimony has played a role in determining tax bracket income thresholds.2017 Tax Brackets and Rates
Single Married Filing Jointly Head of Household 10% $0 to $9,325 $0 to $18,650 $0 to $13,350 15% $9,326 to $37,950 $18,651 to $75,900 $13,351 to $50,800 25% $37,951 to $91,900 $75,901 to $153,100 $50,801 to $131,200 28% $91,901 to $191,650 $153,101 to $233,350 $131,201 to $212,500 33% $191,651 to $416,700 $233,351 to $416,700 $212,501 to $416,700 35% $416,701 to $418,400 $416,701 to $470,700 $416,701 to $444,550 39.6% More than $418,400 More than $470,700 More than $444,550 Five of the seven tax brackets had their percentage rates reduced from what they were in the tax year 2017. Only the 10% and 35% tax brackets remained unchanged, despite the fact that they applied to different income ranges. Both the TCJA and inflation adjustments contributed to this.2016 Tax Brackets and Rates
Single Married Filing Jointly Head of Household 10% $0 to $9,275 $0 to $18,550 $0 to $13,250 12% $9,276 to $37,650 $18,551 to $75,300 $13,251 to $50,200 25% $37,651 to $91,150 $75,301 to $151,900 $50,201 to $130,150 28% $91,151 to $190,150 $151,901 to $231,450 $130,151 to $210,800 33% $190,151 to $413,350 $231,451 to $413,350 $210,801 to $413,350 35% $413,351 to $415,050 $413,351 to $466,950 $413,351 to $441,000 39.6% More than $415,050 More than $466,950 More than $441,000 In 2016, the focus of changes was on the income thresholds for each bracket. The minor changes happen every year as the thresholds are adjusted to account for inflation. Because of the economy, the upper limits have been raised slightly to accommodate taxpayers earning a little more. Standard deductions and the amounts of some tax credits are among the provisions that are adjusted annually for inflation.2015 Tax Brackets and Rates
Single Married Filing Jointly Head of Household 10% $0 to $9,225 $0 to $18,450 $0 to $13,150 15% $9,226 to $37,450 $18,451 to $74,900 $13,151 to $50,200 25% $37,451 to $90,750 $74,901 to $151,200 $50,201 to $129,600 28% $90,751 to $189,300 $151,201 to $230,450 $129,601 to $209,850 33% $189,301 to $411,500 $230,451 to $411,500 $209,851 to $411,500 35% $411,501 to $413,200 $411,501 to $464,850 $411,501 to $439,000 39.6% More than $413,200 More than $464,850 More than $439,000 From 2014 to 2015, the top income limit for the 10% tax bracket increased by only $50 for single filers but by $200 for the head of household filers. In general, and compared to previous years, the changes in the tax year 2015 were minor. Only the income thresholds were changed, but the percentages in each bracket remained unchanged.2014 Tax Brackets and Rates
Single Married Filing Jointly Head of Household 10% $0 to $9,075 $0 to $18,150 $0 to $12,950 15% $9,076 to $36,900 $18,151 to $73,800 $12,951 to $49,400 25% $36,901 to $89,350 $73,801 to $148,850 $49,401 to $127,550 28% $89,351 to $186,350 $148,851 to $226,850 $127,551 to $206,600 33% $186,351 to $405,100 $226,851 to $405,100 $206,601 to $405,100 35% $405,101 to $406,750 $405,101 to $457,600 $405,101 to $432,200 39.6% More than $406,750 More than $457,600 More than $432,200 The percentages in the various tax brackets remained unchanged in 2014. Only the income ranges changed, but due to inflation in 2014, they were a little more generous. For single filers, the upper limit has increased by $150 since 2013. Heads of household filers, on the other hand, were restricted to a $200 increase over the previous year's threshold.2013 Tax Brackets and Rates
Single Married Filing Jointly Head of Household 10% $0 to $8,925 $0 to $17,850 $0 to $12,750 15% $8,926 to $36,250 $17,851 to $72,500 $12,751 to $48,600 25% $36,251 to $87,850 $72,501 to $146,400 $48,601 to $125,450 28% $87,851 to $183,250 $146,401 to $223,050 $125,451 to $203,150 33% $183,251 to $398,350 $223,051 to $398,350 $203,151 to $398,350 35% $398,351 to $400,000 $398,351 to $450,000 $398,351 to $425,000 39.6% More than $400,000 More than $450,000 More than $425,000 On January 3, 2013, the American Taxpayer Relief Act of 2012 (ATRA) was signed into law. In the tax year 2013, the legislation established a new top income tax bracket of 39.6%, which remained in effect for the next five years until 2017. There were only six tax brackets prior to this year.2012 Tax Brackets and Rates
Single Married Filing Jointly Head of Household 10% $0 to $8,700 $0 to $17,400 $0 to $12,400 15% $8,701 to $35,350 $17,401 to $70,700 $12,401 to $47,350 25% $35,351 to $85,650 $70,701 to $142,700 $47,351 to $122,300 28% $85,651 to $178,650 $142,701 to $217,450 $122,301 to $198,050 33% $178,651 to $388,350 $217,451 to $388,350 $198,051 to $388,350 35% More than $388,350 More than $388,350 More than $388,350 2012 was the last year in which there were only six tax brackets, the highest of which was 35 percent. In 2012, the Jobs and Growth Tax Relief Reconciliation Act of 2003 remained in effect. Until ATRA took over in January 2013, this legislation would be in effect. Important: At the time, the rule that married taxpayers filing jointly would get twice the exemptions as single filers were in effect, but it only applied up to the 28 percent bracket. To round out the 33 percent and 35 percent brackets, the same ceilings were applied to joint filers, heads of household, and single filers.2011 Tax Brackets and Rates
Single Married Filing Jointly Head of Household 10% $0 to $8,500 $0 to $17,000 $0 to $12,150 15% $8,501 to $34,500 $17,001 to $69,000 $12,151 to $46,250 25% $34,501 to $83,600 $69,001 to $139,350 $46,251 to $119,400 28% $83,601 to $174,400 $139,351 to $212,300 $119,401 to $193,350 33% $174,401 to $379,150 $212,301 to $379,150 $193,351 to $379,150 35% More than $379,150 More than $379,150 More than $379,150 In 2011, Congress passed the Jobs and Growth Tax Relief Reconciliation Act of 2003. Despite this, the 33 percent and 35 percent bracket income thresholds for single, married filing jointly, and head of household filers were all the same. Only the income spans increased from the previous year to account for inflation.Taxes Prior to 2021
Although the legislation mentioned above played a role in changing tax brackets and rates, it wasn't the only one that had an impact on taxpayers. In 1986, President Ronald Reagan signed the Tax Reform Act, which made some of the most significant changes to the tax code in over 30 years. Since 1918, it was only the third major change in tax law. More than 300 changes were made, and it took three years for the government to ensure that all of the rules were in place.Most Commonly Asked Questions (FAQs)
How do I figure out which tax bracket I'm in?
Your marginal tax bracket is the one in which you are taxed on the highest dollar of your taxable income. However, keep in mind that this rate does not apply to all of your earnings. If your taxable income is $50,000 and you're a single filer, you'll be subject to three different tax rates.What's the link between tax rates and revenue?
While a tax rate is a rate at which a government imposes taxes, tax revenue is the total amount of money collected from all sources by the government. It goes far beyond the individual income tax. Sales taxes, payroll taxes, corporate and business taxes, as well as taxes on property and transfers of property, such as by gift or inheritance, all contribute to tax revenue.What are the tax rates on capital gains?
You earn capital gains when you sell an asset for a higher price than it costs you. Different rates of taxation may apply to these gains. If you held the asset for one year or less before selling it, you'd pay the same tax rate as your marginal tax bracket. If you owned it for more than a year, you'd pay a lower long-term capital gains tax rate: 0 percent, 15%, or 20%, depending on your modified adjusted gross income.