Tax Bracket

Most people cash their paychecks without really looking much at the taxes taken out. But when Tax Day comes around, they’re surprised to see how much is actually withheld.

How much money you make in a year determines your tax bracket, and your tax bracket determines how much money you pay in taxes every April. But how do you know what tax bracket you’re in? What if you get a raise, a second job, or get married? How will your tax bracket change?

How Tax Brackets Work

Before finding your personal tax bracket, it’s important to understand how they work.

A tax bracket determines your marginal tax rate or the percentage of your income you owe in taxes based on how much you make. Generally, if you make more money, your marginal tax rate will be higher. Conversely, the lower your salary, the lower your tax rate.

Where it gets slightly more confusing is exactly how they tax your income. Instead of taxing your entire income with one, single tax bracket percentage, they separate your income into chunks and tax it proportionally.

Breaking It Down

Let’s break it down even further. If you are a single filer who makes $50,000, you fall within the third-tier tax bracket which means your marginal rate is 22% (see the table below). For the first portion of your income, $9,525 of your total income is taxed at 10%, which is the lowest marginal rate. The second portion of your income, from $9,525 – $38,700, is taxed at 15%, which aligns with the second-tier marginal rate. Now, since you fall into the third-tier marginal rate, the remainder of your income, $38,700 – $50,000, is taxed at 22%.

s a recap, depending on which marginal tax rate bracket you fall into, your income is taxed according to that rate and every level below it, based on the range of income identified in the table below.

What Are The Tax Rates?

In 2018, the GOP tax reform plan was passed, which changed the percentages and income ranges for marginal tax rates. In addition, the taxable income ranges differ for single filers, married couples and people filing as Head Of Household. The table below gives an overview of each category and income level.

Marginal Tax Rate Single Filer Taxable Income Range Married Couple Taxable Income Range Head Of Household Taxable Income Range
10% $0-$9,525 $0 – $19,050 $0 – $13,600
12% $9,525 – $38,700 $19,050 – $77,400 $13,600 – $51,800
22% $38,700 – $82,500 $77,400 – $165,000 $51,800 – $82,500
24% $82,500 – $157,500 $165,000 – $315,000 $82,500 – $157,500
32% $157,500 – $200,000 $315,000 – $400,000 $157,500 – $200,000
35% $200,000 – $500,000 $400,000 – $600,000 $200,000 – $500,000
37% Over $500,000 Over $600,000 Over $500,000

Taxes are never fun, but they don’t need to be confusing, too! Good luck figuring out what you’ll owe Uncle Sam next year!