Federal Income Tax Brackets and Rates for the 2020 Tax Year

Tax Brackets and Rates for 2020 Taxes Filed in 2021

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The U.S. government taxes personal income on a progressive, graduated scale—the more you earn, the higher the percentage you'll pay in taxes. Personal income tax rates begin at 10% in tax year 2020—the return you’ll file in 2021—then gradually increase to 12%, 22%, 24%, 32%, and 35% before reaching a top rate of 37%. 

Each tax rate applies to a specific range of income referred to as a “tax bracket.” Where each tax bracket begins and ends depends on your filing status. Charts below show which tax rates apply to which filing status and taxable income amount. 

Taxable income is what's left after you've taken various deductions you claimed.

Key Takeaways

  • Tax brackets vary according to your filing status and income.
  • Your marginal tax rate is different from your average tax rate.
  • You’re required to pay capital gains tax on property you sell.
  • The amount of capital gains tax you pay depends on your filing status and income.
  • Social Security and Medicare are additional taxes you’re likely required to pay.

How Tax Brackets Work

The circumstances of your life determine your filing status, such as whether you're married, single, or have children or other dependents. Tax rates can also vary depending on the type of income being taxed. Ordinary tax rates apply to most incomes, but a separate tax rate schedule applies to income derived from long-term capital gains.

It’s important to note that the bracket you fall into is not the rate applied to all of the income you earn. For example, if your taxable income is $50,000 and you’re a single filer, you fall into the 22% bracket. But that 22% rate is only applied to the amount of income you earned over $40,125, which is the lower threshold for that bracket. The 12% rate is applied to income between $9,875 and $40,125; and the 10% rate is applied to the remainder of income less than $9,875. This is how graduated tax rates work; they apply to all filers.

When you know which bracket you fall into, you can determine how much you’ll be taxed on additional income, like from a second job or side gig, until that income reaches the next bracket. This is also called your "marginal tax rate." If you’re single, and your taxable income is $50,000, your marginal rate is 22%. 

You can also use tax rates to figure out how much tax you'll save by increasing your deductions. A taxpayer in the 24% tax bracket will save $0.24 in federal tax for every $1 spent on a tax-deductible expense if they itemize.

These tax rates and brackets apply to your 2020 tax return, which is due May 17, 2021. (The IRS extended the filing deadline for individual returns from April 15, 2021.) Tax rates and brackets are adjusted annually to keep pace with inflation.

Taxable Income Brackets for Single Filers

Ordinary Income Taxable Income Between
10% $0 to $9,875
12% $9,876 to $40,125
22% $40,126 to $85,525
24% $85,526 to $163,300
32% $163,301 to $207,350
35% $207,351 to $518,400
37% More than $518,400

"Single" filing status means you’re not married or were considered legally separated on the last day of the tax year.

Taxable Income Brackets for Heads of Household

Ordinary Income Taxable Income Between
10% $0 to $14,100
12% $14,101 to $53,700
22% $53,701 to $85,500
24% $85,501 to $163,300
32% $163,301 to $207,350
35% $207,351 to $518,400
37% More than $518,400

The head-of-household filing status applies to taxpayers who are "considered unmarried." They must have at least one dependent and pay more than half the cost of keeping up their home for the year. Married taxpayers may be able to qualify if they haven’t lived with their spouse at any time during the last six months of the year.

The rules for this filing status are strict—if you’re not sure whether you qualify, speak with a tax professional.

Taxable Income Brackets for Married Taxpayers Filing Separately

Ordinary Income Taxable Income Between
10% $0 to $9,875
12% $9,876 to $40,125
22% $40,126 to $85,525
24% $85,526 to $163,300
32% $163,301 to $207,350
35% $207,351 to $311,025
37% More than $311,025

This is your filing status if you're legally married, don't qualify as head of household, and don't want to file a tax return jointly with your spouse. Although the tax brackets are pretty much the same as for single filers, you'll notice that high earners take a bit of a hit when they file separately.

Taxable Income Brackets for Married Taxpayers Filing Jointly

Ordinary Income Taxable Income Between
10% $0 to $19,750
12% $19,751 to $80,250
22% $80,251 to $171,050
24% $171,051 to $326,600
32% $326,601 to $414,700
35% $414,701 to $622,050
37% More than $622,050

This is your status if you're married and filing a tax return with your spouse. You combine your incomes and deductions.

If your spouse died within the last two years, and you haven't remarried, you may be able to claim the qualifying widow(er) status. The Internal Revenue Code provides that widows/widowers are entitled to the same tax provisions they'd enjoy if they were still able to file jointly with their spouses.

Each Tax Bracket Applies to a Portion of Income 

As mentioned above, your marginal tax rate—the bracket that your income amount falls into—is not applied to all of your earned income.

Let's say you’re a single filer, and your taxable income is $100,000. Your marginal tax rate is, therefore, 24%. You'll pay that rate only on the amount of taxable income over $85,525 ($14,475). You'll pay 22% on the income between $40,125 and $85,525, and 12% on income between $9,875 and $40,125. Finally, you’ll pay 10% on income less than $9,875. 

This tax rate chart shows how the mechanics of this work.

If Your Taxable Income Is Between: Your Tax Is:
$0 and $9,875 10% up to $987.50
$9,876 and $40,125 $987.50 plus 12% of the amount over $9,875
$40,126 and $85,525 $4,617.50 plus 22% of the amount over $40,125
$85,526 and $163,300 $14,605.50 plus 24% of the amount over $80,525
$163,301 and $207,350 $33,271.50 plus 32% of the amount over $163,300
$207,351 and $518,400 $47,367.50 plus 35% of the amount over $207,350
$518,400 or more $156,235.00 plus $37% of the amount over $518,400

Using the example of $100,000 of taxable income, your total tax bill could be calculated as follows:

  • $14,605.50 plus 24% of $14,475
  • = $14,605.50 + $3,474 
  • = $18,079.50

So, if your taxable income is $100,000, and you’re a single filer, you would owe the IRS $18,079.50. Note that while your marginal tax rate is 24% in this example, your average tax rate is actually 18% ($18,079.50/$100,000 = 0.18 = 18%).

Capital Gains Tax Rates

Long-term gains result from the sale of property you've held for more than one year, such as a stock portfolio, while short-term capital gains result from assets you've owned for a year or less and are taxed as ordinary income.

Long-term capital gains have their own tax brackets to determine how they are taxed . These income spans apply to your overall income, including both capital gains and ordinary income.

The long-term capital gains tax brackets for single filers for the 2020 tax year are:

Income Range Long Term Capital Gains Tax Rate
$0 to $40,000 0%
$40,001 to $441,450 15%
over $441,450 20%

The long-term capital gains rate for those married filing separately is the same as for single filers except that the 15% bracket tops out at $248,300.

The long-term capital gains tax brackets for head-of-household filers for the 2020 tax year are:

Income Range Long Term Capital Gains Tax Rate
$0 to $53,600 0%
$53,601 to $469,050 15%
over $469,050 20%

For married filers of joint returns, the capital gains tax brackets for tax year 2020 are:

Income Range Long Term Capital Gains Tax Rate
$0 to $80,000 0%
$80,001 to $496,600 15%
over $496,600 20%

Capital gains resulting from certain investments are also subject to the net investment income tax at a rate of 3.8%. This tax may apply if filers have net investment income and a modified adjusted gross income over the following threshold amounts, according to their filing status.

  • Married filing jointly or qualifying widow(er): over $250,000
  • Single or head of household: over $200,000
  • Married filing separately: over $125,000

Social Security Tax Rates

Another tax that probably applies to your income is Social Security tax. The Social Security tax rate is 12.4% on wages (you pay half, and your employer pays half) up to the Social Security wage base, which is $137,700 in 2020. This wage base is adjusted annually to keep up with inflation. Anything above the wage base amount is not subject to Social Security tax.

The maximum Social Security tax paid by employees is $8,537.40 for tax year 2020, or 6.2% of $137,700. Self-employed filers pay the full 12.4%, for a maximum of $17,074.80 for tax year 2020.

Medicare Tax Rates

The Medicare tax rate is 2.9% on wages and self-employment income. There's no wage base for this tax—all ordinary income is taxed at that rate. Employees pay 1.45% and employers pay the other 1.45%. Self-employed individuals pay the whole 2.9%. 

The Additional Medicare Tax rate is 0.9% on wages and self-employment income, but it's only applicable to incomes over $200,000 as of tax year 2020. Employers don’t have to match any portion of this tax.

Tax laws change periodically, so you should always consult with a tax professional for the most up-to-date advice. Keep an eye on announcements from the IRS, and take the time to understand all of your sources of income so that you'll be prepared come tax season.

Frequently Asked Questions (FAQs)

What's the standard deduction?

When you file your federal taxes, you can choose between itemizing your deductions and taking the standard deduction. The standard deduction is the portion of your income that isn't subject to taxes. It reduces your tax bill. The standard deduction is a fixed dollar amount based on your filing status, whether you're age 65 or older, whether you're blind, and other factors.

What is the short-term capital gains tax rate?

The short-term capital gains tax is a tax you pay on profits from the sales of an asset you've held for one year or less. Short-term capital gains are taxed as ordinary income, which means they're subject to tax brackets.