What Is the Percentage Rate That the IRS Taxes People?
The federal income tax you pay is a percentage of your annual income. For 2010, there are six tax brackets: 10 percent, 15 percent, 25 percent, 28 percent, 33 percent and 35 percent. Not all of your income is taxed at the same rate, which makes the actual taxes you pay lower than your actual bracket percentage.
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Single
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These are the tax brackets for single tax filers: If your income is between $0 and $8,375, your tax bracket is 10 percent; between $8,375 and $34,000, your tax bracket is 15 percent; between $34,000 and $82,400, 25 percent; between $82,400 and $171,850, 28 percent; between $171,850 and $373,650, 33 percent; more than $373,650, 35 percent.
Married Couples
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These are the tax brackets for married couples that file jointly: If your income is between $0 and $16,750, your tax bracket is 10 percent; between $16,750 and $68,000, your tax bracket is 15 percent; between $68,000 and $137,300, 25 percent; between $137,300 and $209,250, 28 percent; between $209,250 and $373,650, 33 percent; more than $373,650, 35 percent.
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Married, but Filing Separately
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These are the tax brackets for married couples that file separately: If your income is between $0 and $8,375, your tax bracket is 10 percent; between $8,375 and $34,000, your tax bracket is 15 percent; between $34,000 and $68,650, 25 percent; between $68,650 and $104,625, 28 percent; between $104,625 and $186,825, 33 percent; more than $186,825, 35 percent.
Head of Household
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These are the tax brackets for head of household tax filers: If your income is between $0 and $11,950, your tax bracket is 10 percent; between $11,950 and $45,550, your tax bracket is 15 percent; between $45,550 and $117,650, 25 percent; between $117,650 and $190,550, 28 percent; between $190,550 and $373,650, 33 percent; more than $373,650, 35 percent.
Effective Tax Rate
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If you fall into a tax bracket higher than 10 percent, you won't pay the highest tax rate on all your income. Instead, each level of income is taxed at the corresponding tax bracket. For example, if you are a single tax filer making $45,000 a year, your income between $0 and $8,375 is taxed at 10 percent, the income between $8,375 and $34,000 is taxed at 15 percent, and the income between $34,000 and $45,000 is taxed at 25 percent. This makes your average or effective tax rate 16.51 percent.
Taxable Income
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Your tax rate applies to your taxable income, which may be less than your gross income because of tax deductions and credits. The IRS allows a standard deduction for all tax filers. For singles, the deduction is $5,700; married filing jointly it's $11,400; and for head of household filers, the standard deduction is $8,400. Tax filers can also take a personal exemption of $3,650. Other deductions such as IRA contributions or student loan interest paid also decrease the taxable income.
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