The GOP tax reform plan was recently passed, and it made some pretty significant changes to the federal income tax brackets for 2018. The seven-bracket structure remains the same, but most of the tax rates and income thresholds have changed. While there's a chance that these tax brackets may change if the GOP tax reform efforts are successful, here's a guide to the current 2018 tax brackets and what they could mean to you.
How tax brackets work
First of all, it's important to discuss what is meant by a "tax bracket." Also known as marginal tax rates, tax brackets tell you the tax rate you pay on each dollar of your income.
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In other words, if your taxable income falls within the 22% tax bracket for your filing status, that doesn't mean you'll pay the IRS 22% of your taxable income. Instead, you'll pay 10% on some of your income, 12% on another portion of your income, and 22% on income above a certain threshold. Put another way, your marginal tax rate is the rate you'll pay on your highest dollar of income, not an overall tax rate.
The 2018 tax brackets refer to the rates you'll pay on income earned in 2018, which you'll report on the tax return you file in 2019. If you're looking for the tax rates you'll pay on the tax return you'll file in 2018, you need the 2017 tax brackets. And also check out our complete guide to the new tax changes to find out how else your 2018 tax bill could be affected.
The 2018 tax brackets
For 2018, there are seven IRS tax brackets. Here's how they look as of this writing, along with a quick method to calculate your own tax.
For single filers:
|
Marginal Tax Rate |
Taxable Income Range |
If Your Income Falls Within This Range, Your Income Tax Is.. |
|---|---|---|
|
10% |
$0-$9,525 |
10% of your taxable income |
|
12% |
$9,525-$38,700 |
$952.50 + 12% of the amount over $9,525 |
|
22% |
$38,700-$82,500 |
$4,453.50 + 22% of the amount over $38,700 |
|
24% |
$82,500-$157,500 |
$14,089.50 + 24% of the amount over $82,500 |
|
32% |
$157,500-$200,000 |
$32,089.50 + 32% of the amount over $157,500 |
|
35% |
$200,000-$500,000 |
$45,689.50 + 35% of the amount over $200,000 |
|
37% | Over $500,000 |
$150,689.50 + 37% of the amount over $500,000 |
Data Source: IRS.
For heads of household:
|
Marginal Tax Rate |
Taxable Income Range |
If Your Income Falls Within This Range, Your Tax Is.. |
|---|---|---|
|
10% |
$0-$13,600 |
10% of your taxable income |
|
12% |
$13,600-$51,800 |
$1,360 + 12% of the amount over $13,600 |
|
22% |
$51,800-$82,500 |
$5,944 + 22% of the amount over $51,800 |
|
24% |
$82,500-$157,500 |
$12,698 + 24% of the amount over $82,500 |
|
32% |
$157,500-$200,000 |
$30,698 + 32% of the amount over $157,500 |
|
35% |
$200,000-$500,000 |
$44,298 + 35% of the amount over $200,000 |
|
37% |
Over $500,000 |
$149,298 + 37% of the amount over $500,000 |
Data Source: IRS.
For married couples filing jointly:
|
Marginal Tax Rate |
Taxable Income Range |
If Your Income Falls Within This Range, Your Tax Is... |
|---|---|---|
|
10% |
$0- $19,050 |
10% of your taxable income |
|
12% |
$19,050-$77,400 |
$1,905 + 12% of the amount over $19,050 |
|
22% |
$77,400-$165,000 |
$8,907 + 22% of the amount over $77,400 |
|
24% |
$165,000-$315,000 |
$28,179 + 24% of the amount over $165,000 |
|
32% |
$315,000-$400,000 |
$64,179 + 32% of the amount over $315,000 |
|
35% |
$400,000-$600,000 |
$91,379 + 35% of the amount over $400,000 |
|
37% |
Over $600,000 |
$161,379 + 37% of the amount over $600,000 |
Data Source: IRS.
For married couples filing separately:
|
Marginal Tax Rate |
Taxable Income Range |
If Your Income Falls Within This Range, Your Income Tax Is.. |
|---|---|---|
|
10% |
$0-$9,525 |
10% of your taxable income |
|
12% |
$9,525-$38,700 |
$952.50 + 12% of the amount over $9,525 |
|
22% |
$38,700-$82,500 |
$4,453.50 + 22% of the amount over $38,700 |
|
24% |
$82,500-$157,500 |
$14,089.50 + 24% of the amount over $82,500 |
|
32% |
$157,500-$200,000 |
$32,089.50 + 32% of the amount over $157,500 |
|
35% |
$200,000-$300,000 |
$45,689.50 + 35% of the amount over $200,000 |
|
37% |
Over $300,000 |
$80,689.50 + 37% of the amount over $300,000 |
Data Source: IRS.
Standard deductions are nearly doubling
For 2018, the standard deduction is rising siginificantly. The standard deduction lowers the amount of your income that may be considered taxable, and almost any taxpayer who does not itemize their tax deductions can claim it.
|
Tax Filing Status |
2017 Standard Deduction |
2018 Standard Deduction |
|---|---|---|
|
Single |
$6,350 |
$12,000 |
|
Head of household |
$9,350 |
$18,000 |
|
Married filing jointly |
$12,700 |
$24,000 |
|
Married filing separately |
$6,350 |
$12,000 |
Data Source: IRS.
