Federal Income Tax Rates for the Year 2016

Federal tax rates can apply to different income thresholds each year

Chart showing the seven federal tax brackets for 2016
© William Perez / About.com

Not all taxpayers are taxed at the same rate. The U.S. tax code is set up so that a guy who earns $30,000 a year doesn't pay the same percentage of his income as someone who earns $150,000. Income is divided into "tax brackets" and a percentage rate applies to each bracket.

As of the 2016 tax year, these percentage rates begin at 10 percent and gradually increase to 15 percent, 25 percent, 28 percent, 33 percent, 35 percent, and finally to a top rate of 39.6 percent.

Where each of these tax brackets begins and ends depends on your filing status. Congress adjusts the tax rates periodically—or, more specifically, the incomes that correspond with them. 

Tax rates can also vary depending on the type of income you have. A separate tax rate schedule applies to income from long-term capital gains and qualified dividends.

The 2016 Tax Brackets 

These brackets apply to income you earned in 2016 for which you would file a tax return in 2017. The chart below shows the ordinary tax rates in the first column and the rates for long-term gains and qualified dividends in the second column. The rest of the columns show the beginning and ending income perimeters of each tax bracket grouped by filing status. These dollar amounts apply to your taxable income—what's left over after you've taken the standard deduction or itemized your deductions and you've claimed any other deductions that you may be entitled to, such as for dependents.

 

2016 Tax Rates

Tax RateSingleHead of HouseholdMarried Filing SeparatelyMarried Filing Jointly & Qualifying Widow or Widower
Ordinary IncomeLong Term Capital Gains & Qualified DividendsTaxable Income overtoTaxable Income over toTaxable Income overtoTaxable Income overto
10%0%$0$9,275$0$13,250$0$9,275$0$18,550
15%0%9,27537,65013,25050,4009,27537,65018,55075,300
25%15%37,65091,15050,400130,15037,65075,95075,300151,900
28%15%91,150190,150130,150210,80075,950115,725151,900231,450
33%15%190,150413,350210,800413,350115,725206,675231,450413,350
35%15%413,350415,050413,350441,000206,675233,475413,350466,950
39.6%20%415,050--441,000--233,475--466,950--

If you're a single individual and you earn $90,000 a year, you'd fall into the 25 percent tax bracket. That's the easy part—it gets a little more complicated from there. 

You'd actually pay only 10 percent for the portion of your income that falls between $0 and $9,275, and you'd pay 15 percent on the portion between $9,276 and $37,650. That 25 percent tax rate would only apply to the balance of your income. Each percentage rate corresponds to that portion of your earnings. 

2016 Ordinary Tax Rates for Single Filing Status
[Tax Rate Schedule X, Internal Revenue Code section 1(c)]
If taxable income isabcdefg
overbut not overTaxable incomeMinusSubtract (b) from (a)Multiplication amountMultiply (c) by (d)Additional AmountAdd (e) and (f)
$0$9,275 $0 × 10% $0 
9,27537,650 9,275 × 15% 927.50 
37,65091,150 37,650 × 25% 5,183.75 
91,150190,150 91,150 × 28% 18,558.75 
190,150413,350 190,150 × 33% 46,278.75 
413,350415,050 413,350 × 35% 119,934.75 
415,050-- 415,050 × 39.6% 120,529.75 

President Donald Trump has proposed whittling these tax brackets down to just three: 10 percent, 25 percent and 35 percent, but that has not yet happened midway through 2017. 

Calculating Your Effective Tax Rate

If you want to crunch numbers and do the math, it works like this: Take your taxable income and subtract the amount where the relevant tax bracket begins, which would be Columns A and B.

This leaves just the taxable income within that tax bracket in Column C. Then multiply this amount by the tax rate for that bracket—Columns D and E.

This is the amount of tax that would be due on the income within that tax bracket. Then add to this amount the cumulative federal tax on income that falls in the lower tax rates, represented in Column F. This will tell you the total amount of federal income tax owed in Column G. 

Here's an example. Suppose Edith, a single person, has taxable income of $100,000. This falls in the 28 percent tax bracket, which ranges from $91,150 to $190,150 of taxable income for her filing status. Assuming that all Edith's income is subject to ordinary tax rates, we would figure her federal income tax like this:

Example
If taxable income isabcdefg
overbut not overTaxable incomeMinusSubtract (b) from (a)Multiplication amountMultiply (c) by (d)Additional AmountAdd (e) and (f)
91,150190,150$100,00091,1508,850× 28%2,47818,558.7521,036.75

Edith is responsible for paying $21,036.75 of federal income tax on taxable income of $100,000. 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 tax liability divided by her taxable income: $21,036.75 divided by $100,000, or 21.03675 percent. The effective tax rate is a blend of all the tax rates that apply to your income so it's typically less than your tax bracket rate. 

If Edith qualifies as head of household or if she's married, the following charts would apply: 

2016 Ordinary Tax Rates for Head of Household Filing Status
[Tax Rate Schedule Z, Internal Revenue Code section 1(b)]
If taxable income isabcdefg
overbut not overTaxable incomeMinusSubtract (b) from (a)Multiplication amountMultiply (c) by (d)Additional AmountAdd (e) and (f)
$0$13,250 $0 × 10% $0 
13,25050,400 13,250 × 15% 1,325 
50,400130,150 50,400 × 25% 6,897.50 
130,150210,800 130,150 × 28% 26,835.00 
210,800413,350 210,800 × 33% 49,417.00 
413,350441,000 413,350 × 35% 116,258.50 
441,000 --  441,000 × 39.6% 125,936.00 

 

2016 Ordinary Tax Rates for Married Filing Separately Filing Status
[Tax Rate Schedule Y-2, Internal Revenue Code section 1(d)]
If taxable income isabcdefg
overbut not overTaxable incomeMinusSubtract (b) from (a)Multiplication amountMultiply (c) by (d)Additional AmountAdd (e) and (f)
$0$9,275 $0 × 10% $0 
9,27537,650 9,275 × 15% 927.50 
37,65075,950 37,650 × 25% 5,183.75 
75,950115,725 75,950 × 28% 14,758.75 
115,725206,675 115,725 × 33% 25,895.75 
206,675233,475 206,675 × 35% 55,909.25 
233,475 --  233,475 × 39.6% 65,289.25 

 

2016 Ordinary Tax Rates for Married Filing Jointly and Qualifying Widow or Widower Filing Status
[Tax Rate Schedule Y-1, Internal Revenue Code section 1(a)]
If taxable income isabcdefg
overbut not overTaxable incomeMinusSubtract (b) from (a)Multiplication amountMultiply (c) by (d)Additional AmountAdd (e) and (f)
$0$18,550 $0 × 10% $0 
18,55075,300 18,550 × 15% 1,855.00 
75,300151,900 75,300 × 25% 10,367.50 
151,900231,450 151,900 × 28% 29,517.50 
231,450413,350 231,450 × 33% 51,791.50 
413,350466,950 413,350 × 35% 111,818.50 
466,950 --  466,950 × 39.6% 130,578.50 

Social Security and Medicare Tax Rates

Unfortunately, we don't just pay income tax on our earnings and income. These taxes also apply: 

  • Social Security tax is imposed at a rate of 12.4 percent on wages and on self-employment income up to the annual Social Security wage base of $118,500. This wage base increases to $127,200 in 2017. Only income you earn up to this amount is subject to the Social Security tax.
  • Medicare tax at a rate of 2.9 percent on wages and self-employment income

These taxes apply pretty much to all earners, but the self-employed must pay this full percentage of both taxes. Collectively, this is referred to as the self-employment tax. Taxpayers who are employed by others pay only half these percentages. Their employers must pay the other half. 

The Additional Medicare Tax

This tax applies at a rate of 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
  • Married Filing Separately: $125,000

The Alternative Minimum Tax or AMT

If You're Married Filing Separately:

  • 26 percent on taxable income as recalculated under the AMT rules under $93,150
  • 28 percent on AMT taxable income over $93,150

For Single, Head of Household, Married Filing Jointly, and Qualifying Widow(er):

  • 26 percent on AMT taxable income under $186,300
  • 28 percent on AMT taxable income over $186,300

The Net Investment Income Tax

A tax of 3.8 percent applies to 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
  • Married Filing Separately: $125,000

Capital Gains Taxes 

Capital gains tax rates come due whenever you sell an asset for more than your tax basis in it—what you paid for it plus any costs of sale or improvements you made. In other words, your profit is taxed at special rates. The capital gains tax rates depend on whether your gains were short-term or long-term. Short-term gains apply when you owned the asset for just one year or less and they're taxed at ordinary income tax rates—your tax bracket rate. Long-term gains apply to property you held for more than a year. These profits and qualified dividends are taxed at:

  • 0 percent if taxable income falls in the 10 percent or 15 percent marginal tax brackets
  • 15 percent if taxable income falls in the 25, 28, 33 or 35 percent marginal tax brackets
  • 20 percent if taxable income falls in the 39.6 percent marginal tax bracket
  • 25 percent on depreciation recapture
  • 28 percent on collectibles
  • 28 percent on qualified small business stock after exclusion

If you have long-term capital gains or qualified dividends, use Worksheet 2-7 in combination with the tax rate charts (Worksheet 1-6), both of which can be found in IRS Publication 505.  

How to Use Your Marginal Tax Rates

You can use these tax rate schedules and your marginal tax rate to help plan your finances in a number of ways. They'll tell you how much tax you'll pay on any extra income you earn, such as if you decide to take on a second job that increases your overall income to a higher tax bracket. They'll also tell you how much tax you'll save if you can increase your deductions. For example, if you fall into a 28 percent tax bracket, you'll save 28 cents in federal tax for every dollar you spend on a tax-deductible expense, such as mortgage interest or charity.  

Tax laws and rates can change periodically. Always consult with a tax professional for the most up-to-date figures, percentages and rules. This article is not tax advice and is not intended as tax advice.