If you’re in the 15 percent tax bracket, keep in mind that the federal income tax rate is marginal. That means you don’t pay 15 percent on all your income.
The 15 percent tax bracket was eliminated for 2018, and taxpayers will now either fall into the 12 or 22 percent tax bracket.
Understand the 15 Percent Tax Bracket
You will pay 10 percent on your adjusted gross income, the next lowest tax rate, up until your income meets the 15 percent federal income tax percentage. For example, in 2017 you enter the 15 percent tax bracket at $9,325 if you file as single.
Adjusted Gross Income
Your income tax bracket is not based only on your earnings, but on your adjusted gross income. Your AGI reflects all of your gross income including items such as interest and dividends, minus deductions. Without certain deductions, such as those for mortgage interest and property tax, your AGI may prove higher and put you into a higher tax bracket. You must itemize in order to claim deductions on your federal income tax return.
U.S. Tax Rates for 2018
The Tax Cuts and Jobs Act signed into law by President Donald J. Trump on December 22, 2017, eliminated the 15 percent tax bracket. The tax brackets under the TCJA, which is set to expire in 2026, are 10 percent, 12 percent, 22 percent, 24 percent, 32 percent, 35 percent and 37 percent. Someone currently in the 15 percent bracket might find himself in the 22 percent bracket, which starts at $38,700 and ranges up to $81,199 for a single filer or a person filing as head of household, and $77,400 to $164,999 for a married couple filing jointly.
If a person formerly filing at the 15 percent tax bracket falls into the 12 percent tax bracket for 2018, it has limits set at $9,525 to $38,699 for single filers, $13,600 to $51,799 for those filing as heads of households and $19,050 to $77,399 for those married and filing jointly. The standard deduction has almost doubled from the previous year, at $12,000 per person or $24,000 for those married and filing jointly. That means fewer people will itemize deductions this year.
U.S. Tax Rates for 2017
For 2017, a single filer in the 15 percent tax bracket has an AGI between $9,325 and $37,950 and will pay $932.50 in federal tax plus 15 percent of the excess over $9,325. A person filing as head of household in the 15 percent tax bracket has an AGI of $13,350 to $50,800 and will pay 15 percent in federal tax plus 15 percent of the excess over $13,350. A married couple filing jointly in the 15 percent tax bracket has an AGI between $18,650 and $75,900 and will pay $1,865 in federal tax plus 15 percent of the excess over $18,650.
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