Federal Income Tax Rates for the Year 2017

• Edith's taxable income falls within the 28 percent tax bracket.
• Her income over $91,150 is taxed at the 28 percent rate.
• The rest of her income is taxed at the lower 10 percent, 15 percent and 25 percent rates.
• Edith's effective or average tax rate is her total tax liability divided by her taxable income, or 20,981.75 divided by 100,000 equaling 20.98175 percent. This effective tax rate is a blend of all the tax rates that apply to her income.
• Because Edith falls within the 28 percent tax bracket, any long-term capital gains or qualified dividends would be taxed at 15 percent rather than 28 percent. 

Other Tax Rates in Effect for 2017

In addition to the federal income taxes on ordinary income, there are other taxes that may apply to personal income:

• The Social Security tax rate is 12.4 percent on wages and self-employment income up to the annual Social Security wage base of $127,200. This means that the maximum Social Security tax paid by employees is $7,886.40, the maximum paid by employers is $7,886.40, and the maximum paid by self-employed persons is $15,772.80.
• The Medicare tax rate is 2.9 percent on wages and self-employment income.
• The Additional Medicare tax rate is 0.9 percent on wages and self-employment income over the following thresholds: Married Filing Jointly $250,000, Single or Head of Household or Qualifying Widow(er) $200,000, and Married Filing Separately $125,000.
• Alternative Minimum Tax: 26 percent on taxable income (as recalculated under the AMT rules) under $93,900; 28 percent on AMT taxable income over $93,900. For Single, Head of Household, Married Filing Jointly, and Qualifying Widow(er): 26 percent on AMT taxable income under $187,800; 28 percent on AMT taxable income over $187,800. 
• Net investment income is taxed at a rate of 3.8 percent on the lower of net investment income or modified adjusted gross income over the following thresholds: Married Filing Jointly or Qualifying Widow(er) $250,000, Single or Head of Household $200,000, and Married Filing Separately $125,000.
• Capital Gains tax rates vary depending on whether the gains are short-term or long-term. Short-term gains are taxed at ordinary income tax rates. Long-term gains and qualified dividends taxed at 0 percent when taxable income falls in the 10 to 15 percent marginal tax brackets. This increases to 15 percent when taxable income falls in the 25, 28, 33 or 35 percent marginal tax brackets, and to 20 percent when taxable income falls in the 39.6 percent marginal tax bracket. Tax rates are 25 percent on depreciation recapture, 28 percent on collectibles and 28 percent on qualified small business stock after exclusion. 

How to Utilize Your Marginal Tax Rates

Individuals can use the tax rate schedules in a number of ways to help plan their finances. You can use these tax rates to figure out how much tax you'll pay on extra income you earn. For a taxpayer in the 25 percent tax bracket, extra income will be taxed at 25 percent until the taxpayer's income reaches the next tax bracket of 28 percent.

Remember that different intervals of income are taxed at different rates. The income intervals at which the rates apply are based on a person's filing status.

You can also use these tax rates to figure out how much tax you'll save by increasing your deductions. A taxpayer in the 28 percent tax bracket will save 28 cents in federal tax for every dollar spent on a tax-deductible expense, such as mortgage interest or charity.

Marginal tax rates interact with other tax rates, especially the alternative minimum tax. The minimum tax functions to eliminate the tax savings of certain types of deductions.

Source: The official tax brackets for 2017 are published by the Internal Revenue Service in Revenue Procedure 2016-55. 

Please consult tax calculation worksheets in the 2017 Instructions for Form 1040 and the 2017 Tax Tables to compute your actual income tax, Tax computation worksheets are also provided in the 2017 edition of Publication 505, Tax Withholding and Estimated Tax.