Tax brackets determine the rate at which your annual income is taxed. The IRS slightly adjusts the limits of each bracket to account for the status of the economy. Your annual income will place you in a particular bracket. Simply put: more money equates to a higher taxation rate. However, we aren’t subject to a uniform income tax; instead, your own rate is staggered and increased based on your income.
What is a tax bracket?
The IRS releases a new set of tax brackets every year. Although the brackets change yearly, the rate of taxation does not: if your income puts you in the first bracket, you will always be taxed 10% of your income, even if the limit of the bracket increases from $9,025 to $9,225.
Your filing status will determine which set of tax brackets apply to you. Single individuals without dependents and married people filing separately have the same set of brackets; married couples filing together, surviving spouses, and heads of households have a different set with a broader income range in each level.
What bracket do I belong to?
That’s kind of a trick question because it’s common for people to belong to more than one tax bracket (we’ll list them below) which means that they pay the lower brackets’ tax rates on their income within that bracket. As of 2015, if you make less than $9,225 a year, you’ll belong to only one tax bracket: the first level on a tiered level.
Here’s an example that might make more sense. Nicole made $30,000 in taxable income. She’ll pay 10% on her income up to the limit of the first bracket, which would be $922.50 (according to 2015’s brackets). Then, she’ll pay 15% on the remaining $29,077.50 of her income.
If you made $80,000 a year, you would pay 10% on your income up to $9,225. Then, you’d pay 15% on your income up to $37,450. And finally, you’d pay 25% on your remaining income.
Ready to find out your tax bracket?
Here are the 2015 tax brackets for people either filing as single or filling separately from their spouse. If your taxable income is between…
- $0 - $9,225: you pay 10% of your taxable income
- $9,226 - $37,450: you pay $922.50 and 15% of the income over $9,225
- $37,451 - $90,750: you pay $5,156.25 and 25% of the income over $37,450
- $90,571 - $189,300: you pay $18,481.25 and 28% of the income over $90,750
- $189,301 - $411,500: you pay $46,075.25 and 33% of the income over $189,300
- $411,501 - $413,200: you pay $119,401.25 and 35% of the income over $411,500
- $413,201 or more: you pay $119,996.25 and 39.6% of the income over $413,200
If you file as the head of the household, you have a slightly wider range within brackets. If your taxable income is between…
- $0 – 13,150: you pay 10% of your taxable income
- $13,151 – $50,200: you pay $1,315 and 15% of the income over $13,150
- $50,201 - $129,600: you pay $6,872 and 25% of the income over $50,200
- $129,601 - $209,850: you pay $26,772.50 and 28% of the income over $129,600
- $209,851 - $411,500: you pay $49,192.50 and 33% of the income over $209,850
- $411,501 - $439,000: you pay $115,737 and 35% of the income over $411,500
- $439,001 or more: you pay $125,362 and 39.6% of the income over $439,000
Married couples filing together and surviving spouses have more wiggle room within the brackets, due to two sources of income. If your combined taxable income is between…
- $0 - $18,450: you pay 10% of your taxable income
- $18,450 - $74,900: you pay $1,845 and 15% of the income over $18,450
- $74,901 - $151,200: you pay $10,312.50 and 25% of the income over $74,900
- $151,201 - $230,450: you pay $29,387 and 28% of the income over $230,450
- $230,451 - $411,500: you pay $51,577 and 33% of the income over $230,450
- $411,501 - $464,850: you pay $111,324 and 35% of the income over $411,500
- $464,851 or more: you pay $149,996.50 and 39.5% of the income over $464,850
