The United States tax code is a complicated beast. Even something as seemingly simple as calculating how much tax you owe once you've added up all of your income and taken out all of your deductions can be complicated. As of the 2013 tax year, the tax system has seven different rates -- ranging from 10 to 39.6 percent, and there's an additional surcharge that could apply to you as well.
Tax Filing Status
One of the first factors that determines your tax rate isn't your income; it's the way you file your taxes. The Internal Revenue Service defines five filing statuses -- single, married filing jointly, married filing separately, head of household and qualifying widow(er) with dependent child. A head of household is a single person who maintains a home for at least one dependent. Generally, the IRS increases your taxes more slowly when you have a return that reflects more than one person, so a married couple will pay less tax together than a single person making the same income would.
The income tax system in the U.S. is progressive. This means that the more you earn, the more you pay. If you only make $25,000 in taxable income each year, you might only pay 15 percent tax, but if you make $2.5 million per year, you'll pay up to 39.6 percent, as of 2013. A flat tax is one in which the rate is the same no matter what you earn. The Medicare portion of your payroll taxes is flat: As of 2013, you pay 1.45 percent of your wages, no matter what they are (excluding the 0.9 percent surcharge on some high earners). Social Security taxes, on the other hand, are regressive, because you pay a 6.2 percent rate on income up to $113,700 and 0 percent on anything over that level.
Marginal Rates and Brackets
The income that falls subject to a certain tax rate is called a bracket. If you are married and have a 2013 taxable income of $85,000, you'll pay tax in three brackets -- the 10 percent, 15 percent and 25 percent brackets. As your income goes up, your tax bracket goes up. The tax rate on which your next dollar of income would be taxed is your "marginal tax rate." When people say that they pay taxes in the 33 percent bracket, that's their marginal rate, as they've already made enough to fill the 10, 15 and 28 percent brackets.
Tax Rate Schedule
The tax rate schedules take all of these factors into account. Each tax filing status has its own schedule that shows which tax rates apply to which levels of income. For instance, in 2013, a married couple pays 10 percent on income up to $17,850, 15 percent on incomes of $17,851 to $72,500 and 25 percent on income from $72,501 to $146,400. The tax rates keep going up through 28, 33 and 35 percent until you start paying 39.6 percent tax on any income over $450,001. Other filing statuses have lower incomes at which the brackets change. A single person, for instance, only gets to pay the lowest 10 percent rate on his first $8,750 in income.
Steve Lander has been a writer since 1996, with experience in the fields of financial services, real estate and technology. His work has appeared in trade publications such as the "Minnesota Real Estate Journal" and "Minnesota Multi-Housing Association Advocate." Lander holds a Bachelor of Arts in political science from Columbia University.