Tax Rates

Tax Rates

Tax rates change every year. Take a look at this year’s tax rates.

2016 Income Tax Brackets

The Federal income tax has 7 tax brackets: 10%, 15%, 25%, 28%, 33%, 35%, and 39.6%. The amount of tax you owe depends on your filing status and income level.

It’s important to realize that moving into a higher tax bracket does not mean that all of your income will be taxed at a higher rate. Instead, only the money that you earn within a particular tax bracket is subject to that particular tax rate.

Single:

Taxable Income Tax Rate
$0 to $9,275 10%
$9,276 to $37,450 $927.50 plus 15% of the amount over $9,275
$37,651 to $91,150 $5,183.75 plus 25% of the amount over $37,650
$91,151 to $190,150 $18,558.75 plus 28% of the amount over $91,150
$190,151 to $413,500 $46,278.75 plus 33% of the amount over $190,150
$413,351 to $415,050 $119,934.75 plus 35% of the amount over $413,350
$415,051 or more $120,529.75 plus 39.6% of the amount over $415,050

 

Married Filing Jointly or Qualifying Widow(er):

Taxable Income Tax Rate
$0 to $18,550 10%
$18,551 to $75,300 $1,855.00 plus 15% of the amount over $18,550
$75,301 to $151,900 $10,367.50 plus 25% of the amount over $75,300
$151,901 to $231,450 $29,517.50 plus 28% of the amount over $151,900
$231,451 to $413,350 $51,791.50 plus 33% of the amount over $231,450
$413,351 to $466,950 $111,818.50 plus 35% of the amount over $413,350
$466,951 or more $130,578.50 plus 39.6% of the amount over $466,950

 

Married Filing Separately:

Taxable Income Tax Rate
$0—$9,275 10%
$9,276—$37,650 $927.50 plus 15% of the amount over $9,275
$37,651—$75,950 $5,183.75 plus 25% of the amount over $37,650
$75,951—$115,725 $14,758.75 plus 28% of the amount over $75,950
$115,726—$206,675 $25,895.75 plus 33% of the amount over $115,725
$206,676—$233,475 $55,909.25 plus 35% of the amount over $206,675
$233,476 or more $65,289.25 plus 39.6% of the amount over $233,475


Head of Household:

Taxable Income Tax Rate
$0—$13,250 10%
$13,251—$50,400 $1,325 plus 15% of the amount over $13,250
$50,401—$130,150 $6,897.50 plus 25% of the amount over $50,400
$130,151—$210,800 $26,835 plus 28% of the amount over $130,150
$210,801—$413,350 $49,417 plus 33% of the amount over $210,800
$413,351—$441,000 $116,258.50 plus 35% of the amount over $413,350
$441,001 or more $125,936 plus 39.6% of the amount over $441,000


2016 Personal Exemption Amounts

You are allowed to claim one personal exemption for yourself and one for your spouse (if married). However, if somebody else can list you as a dependent on their tax return, you are not permitted to claim a personal exemption for yourself.

For tax year 2016, the personal exemption amount is $4,000 (up from $3,950 in 2014).

The personal exemption amount “phases out” for taxpayers with higher incomes. The Personal Exemption Phaseout (PEP) thresholds are as follows:

Filing Status PEP Threshold Starts PEP Threshold Ends
Single $259,400 $381,900
Married Filing Jointly $311,300 $433,800
Married Filing Separately $155,650 $216,900
Head of Hosuehold $285,350 $407,850


2016 Standard Deduction Amounts

There are two main types of tax deductions: the standard deduction and itemized deductions. You can claim one type of deduction on your tax return, but not both. For example, if you claim the standard deduction, you cannot itemize deductions – and vice versa (if you itemize deductions, you cannot claim the standard deduction). You are allowed to use whichever type of deduction results in the lowest tax.

The standard deduction is subtracted from your Adjusted Gross Income (AGI), thereby reducing your taxable income. For tax year 2016, the standard deduction amounts are as follows:

Filing Status Standard Deduction
Single $6,300
Married Filing Jointly $12,600
Married Filing Separately $6,300
Head of Household $9,300
Qualifying Widow(er) $12,600

 

Note that there is an additional standard deduction for elderly or blind taxpayers, which is $1,250 for tax year 2016. The additional standard deduction amount increases to $1,550 if the individual is also unmarried and not a qualifying widow(er).

 

RELATED: 2016 Federal Tax Calendar