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Step 1
Add up your total income. Income tax is figured off your adjusted gross income (AGI), which you arrive at by adding up all your pay, bonuses, investment gains and other income and then subtracting any deductions and credits you qualify for.
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Step 2
Choose your filing status. The income limits for each tax bracket depend on whether you are filing as single, married or head of household. Married couples can file jointly or as individuals.
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Step 3
If you are self-employed, calculate the self-employment tax. This tax is 15.3 percent and covers Social Security (12.9 percent) and Medicare (2.4 percent). If you work for a company, it usually deducts this amount from your paycheck.
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Step 4
Calculate capital gains taxes. Though many capital gains are taxed the same as ordinary income, some are taxed differently or have their own deductions. For instance, starting in 2008, people in the 10 and 15 percent tax brackets don't have to pay any taxes on long-term capital gains (gains on investments held at least a year.)
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Step 5
Find your federal tax bracket. As of 2009, the federal income tax rate ranged from 10 percent to 35 percent of income, depending on how much money you make. For instance, a single person with $50,000 AGI would pay 10 percent on the first $8,350, 15 percent on the income between $8,350 and $33,950 and 25 percent on the rest.
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Step 6
Figure out your state income tax rate, if applicable. Some states do not have an income tax, and others levy income tax only on investment gains. For the states that do have an income tax, rates varied from less than 1 percent to more than 9 percent as of 2008 for various levels of income, according to the Federation of Tax Administrators.
