When it comes to taxes, it often pays to think ahead. There are, after all, actions you can take throughout the year that can shrink your tax bill come April -- such as selling losing stocks to offset taxable capital gains. It can help to cast an eye on upcoming income tax brackets, too, so that you have an idea of what to expect.
Image source: Getty Images.
Here, then, are the income tax brackets for 2017. Note that they apply to income earned in the 2017 tax year for the return you'll prepare in 2018. They're not the 2016 brackets that apply to the tax return you'll be preparing in a few months. (Find those here.)
|
Tax Rate |
Single |
Married Filing Jointly |
Married Filing Separately |
Head of Household |
|---|---|---|---|---|
|
10% |
$0-$9,325 |
$0-$18,650 |
$0-$9,325 |
$0-$13,350 |
|
15% |
$9,326-$37,950 |
$18,651-$75,900 |
$9,326-$37,950 |
$13,351-$50,800 |
|
25% |
$37,951-$91,900 |
$75,901-$153,100 |
$37,951-$76,550 |
$50,801-$131,200 |
|
28% |
$91,901-$191,650 |
$153,101-$233,350 |
$76,551-$116,675 |
$131,201-$212,500 |
|
33% |
$190,651-$416,700 |
$233,351-$416,700 |
$116,676-$208,350 |
$212,501-$416,700 |
|
35% |
$416,701-$418,400 |
$416,701-$470,700 |
$208,351-$235,350 |
$416,701-$444,550 |
|
39.6% |
$418,401 and above |
$470,701 and above |
$235,351 and above |
$444,551 and above |
Source: Data from IRS.gov.
How the tax schedule works
If you're single and assuming that your taxable income of $92,000 will get a 28% haircut because the $92,000 amount falls in the 28% bracket above, you're in for some good news. The right way to read the schedule is this: Your first $9,325 of income will be taxed at 10% ($932.50). Your income between $9,326 and $37,950 (that's $28,625) will be taxed at 15% ($4,293.75). Your income between $37,951 and $91,900 (that's $53,950) will be taxed at 25% ($13,487.50). And finally, your income over $91,900 ($100) will be taxed at 28% ($28). Add up those four tax bites and you'll arrive at your total tax due, $18,741.75.
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Marginal vs. effective
While your $92,000 income has you in the 28% tax bracket, it's not all taxed at a flat 28%. If it were, your tax bill would be $25,760. Instead, the U.S. has a progressive tax system that taxes your early dollars a relatively small amount. If you make it to higher income amounts, the higher rates will be applied to your later dollars.
Divide your actual tax amount, $18,741.75, by your $92,000 income, and you'll arrive at 20.4%. That's your effective tax rate vs. your marginal rate of 28%. The marginal rate reflects what your next dollar of income would be taxed at, while the effective rate reflects the rate you'll pay on all your income.
That's what you can expect for 2017 when it comes to your income tax. Stay tuned for further tax changes and updates as they happen.
