Overview of 2017 Income Tax Brackets

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Federal income tax brackets allow you to determine at what tax rate your income will be taxed, depending on your filing status and taxable income level. The IRS adjusts the tax brackets yearly for inflation, and currently there are seven: 10%, 15%, 25%, 28%, 33%, 35%, and 39.6%

The 2017 tax brackets

You will be taxed at the lowest 10% rate for taxable income between $1 and $9,225 for single and married but separate filers, $1 and $18,450 for married joint or widowed filers, and $1 and $13,150 for heads of household.

Taxable income between $9,226 and $37,450 for single and married but separate filers, $18,451 and $74,900 for married joint or widowed filers, and $13,151 and $50,200 for heads of household, will be taxed by the IRS at 15% in 2015.

The 25% tax bracket applies to taxable income between $37,451 and $90,750 for single filers, $37,451 and $75,600 for married separate filers, $74,901 and $151,200 for married joint or widowed filers, and $50,200 and $129,600 for heads of household.

The next tax bracket, 28%, applies to taxable income between $90,751 and $189,300 for single filers, $75,601 and $115,225 for married separate filers, $151,201 and $230,450 for married joint or widowed filers, and $129,601 and $209,850 for heads of household.

Taxable income between $189,301 and $411,500 for single filers, $115,226 and $205,750 for married separate filers, $230,451 and $411,500 for married joint or widowed filers, and $209,851 and $411,500 for heads of household is subject to the 33% tax rate.

You will incur 35% tax between $411,501 and $413,200 for single filers, $205,751 and $232,425 for married separate filers, $411,501 and $464,850 for married joint or widowed filers, and $411,501 and $439,200 for heads of household.

Finally, the highest tax bracket of 39.6% is reserved for taxable income over $413,200 for single filers, over $232,425 for married separate filers, over $464,850 for married joint or widowed filers, and over $439,200 for heads of household.

How are Tax Brackets Applied?

It is important to note that taxable income is not taxed within one bracket. Only amounts within a particular tax bracket are subject to that particular rate. For example, a single filer with a taxable income of $35,000 will be taxed $922.50 (10% of entire first bracket) plus 15% of any amount between $9,226 and $37,450.

Standard Deductions

To lower taxable income, you can claim either standard or itemized deductions. Which one you choose depends on how much it affects your taxable income and lowers your overall tax rate. Standard deductions for 2017 are $6,300 for single and married but separate filers, $12,600 for married joint or qualified widowed filers, and $9,250 for heads of household.

Personal Exemptions

Unless someone can list you as their tax dependent, you can also claim one personal exemption for yourself, and one for your spouse if married. For 2017, the personal exemption amount is $4,000. This amount varies yearly, and may increase in 2018.

Although preparing your final income tax return may be much more complicated, tax brackets can give you a good preliminary estimate of what your overall federal tax amount will be. Knowing your 2017 tax bracket can help with 2016 income tax return as you can directly affect your taxable income.