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2014 Tax Brackets: Your Tax Rate May Not Be What You Think


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If you want to know what the 2014 tax brackets are, you'll find that information here. But be careful -- many people view them incorrectly. Your tax rate probably isn't what you're assuming it is.

It's easy to assume that if you earn a certain income, you're in one particular tax bracket. The truth, though, is that most of us are in several brackets. The following breakdowns of the actual 2014 tax brackets might make that clearer -- pick your tax filing status and follow that column down to where your income tops out:

2014 Tax Brackets

Single Filers

Married Filing Jointly or Qualifying Widow/Widower

Married Filing Separately

Head of Household

10%

On taxable income up to $9,075

On taxable income up to $18,150

On taxable income up to $9,075

On taxable income up to $12,950

15%

On taxable income from $9,076 to $36,900

On taxable income from$18,151 to $73,800

On taxable income from $9,076 to $36,900

On taxable income from $12,951 to $49,400

25%

On taxable income from $36,901 to $89,350

On taxable income from $73,801 to $148,850

On taxable income from $36,901 to $74,425

On taxable income from $49,401 to $127,550

28%

On taxable income from $89,351 to $186,350

On taxable income from $148,851 to $226,850

On taxable income from $74,426 to $113,425, plus

On taxable income from $127,551 to $206,600

33%

On taxable income from $186,351 to $405,100

On taxable income from $226,851 to $405,100

On taxable income from $113,426 to $202,550, plus

On taxable income from $206,601 to $405,100

35%

On taxable income from $405,101 to $406,750

On taxable income from $405,101 to $457,600

On taxable income from $202,551 to $228,800, plus

On taxable income from $405,101 to $432,200

39.6%

On taxable income of $406,751 or more

On taxable income of $457,601 or more

On taxable income of $228,801 or more

On taxable income of $432,201 or more

Imagine you're a single filer with $50,000 in taxable income. Among the 2014 tax brackets, you're technically in the 25% bracket. But contrary to what many folks think, your entire income is not taxed at 25%. Review the whole column for single filers, and you'll see that the first $9,075 of your income is taxed at just 10%, and the next $27,825 is taxed at 15%. It's only the income above $36,900 that's taxed at 25%. Thus, if you hear someone grumbling about being in the 39.6% tax bracket, know that it's only his or her income above $406,750 that's being taxed at that rate.

The IRS makes things simple (though intimidating to look at!) with a long set of tables (link opens PDF). This is the latest one available, showing the tax brackets for last year. Look up the tax that someone with $45,000 in taxable income will pay -- it's $7,185 if they're single. That income level will have them in the 25% tax bracket, but divide $7,185 by $45,000 and you'll see that the actual overall tax rate for that taxpayer is just 16%. At TaxAct.com, you can enter various taxable incomes and see which 2014 tax brackets apply and what the overall effective tax rate is. For example, someone earning $500,000 will be in the 39.6% bracket, but their effective tax rate will be 31%.

So go ahead and review the 2014 tax brackets, but don't ever worry that earning a little more will kick you into a higher bracket. The first dollar that places you in the 35% tax bracket, for example, will only cost you $0.35.


Read/Post Comments (6) | Recommend This Article (7)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On August 06, 2014, at 4:38 PM, pondee619 wrote:

    " The first dollar that places you in the 35% tax bracket, for example, will only cost you $0.35."

    As compared to the last dollar of the 33% bracket which cost you $0.33.

  • Report this Comment On August 07, 2014, at 1:46 PM, djlaino wrote:

    I remember when I was younger hearing people complain that "I don't want to work overtime because it will kick me up into a higher tax bracket and wind up costing me money." They didn't get it. This article is for them.

  • Report this Comment On August 07, 2014, at 5:57 PM, Mathman6577 wrote:

    Many studies have shown that people will not work extra hours to be taxed at a higher rate and businesses will move income overseas to escape taxes. Wishful thinking on the part of socialists will not stop it.

  • Report this Comment On August 08, 2014, at 9:00 PM, DavidDavis wrote:

    Well, it's better to pay these taxes and live easy.

  • Report this Comment On August 09, 2014, at 7:56 PM, kendrajune wrote:

    What this article doesn't address is credits and deductions that also phase out as you reach certain thresholds.

  • Report this Comment On August 09, 2014, at 9:46 PM, DonkeyJunk wrote:

    It's astounding how many people don't understand "progressive tax".

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Selena Maranjian
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Selena Maranjian has been writing for the Fool since 1996 and covers basic investing and personal finance topics. She also prepares the Fool's syndicated newspaper column and has written or co-written a number of Fool books. For more financial and non-financial fare (as well as silly things), follow her on Twitter...

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