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 Internal Revenue Service taxes personal income using a graduated scale. This means that a guy who earns $30,000 a year doesn't pay the same overall percentage in taxes as someone earning $150,000 a year. Income is divided by thresholds or limits into tax brackets, and a percentage rate applies to each bracket. These tax rates start at 10 percent in 2016 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. Tax rates also vary depending on the type of income you have. Ordinary tax rates apply to most types of income, but a separate tax rate schedule applies to income from long-term capital gains and qualified dividends.

Rates — or, more specifically, the incomes that correspond with them — can be adjusted yearly. These brackets and income figures apply to your 2016 earnings which you'll claim on the tax return you file in 2017. 

2016 Tax Brackets 

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 end of each tax bracket, grouped by filing status. These dollar amounts apply to your taxable income, what's left over after you've taken various deductions you may be entitled to. 

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 15 percent on the portion between $9,276 and $37,650. That 25 percent tax rate would apply to the balance of your income. 

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 

 

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 (Columns A and B). This leaves just the taxable income within that tax bracket (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 (Column F) to come up with 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. Assuming that all Edith's income is subject to ordinary tax rates, we would find 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. This effective tax rate is a blend of all the tax rates that apply to her income, so it's typically less than her tax bracket rate. 

If Edit qualifies as head of household or 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 

 

Other Tax Rates in Effect for 2016

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

These taxes apply pretty much to all earners. These others affect select groups

Additional Medicare Tax 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

Alternative Minimum Tax (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

Net investment income tax 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
  • Married Filing Separately: $125,000

Capital gains tax rates depend on whether the gains are short-term or long-term. Short-term gains taxed at ordinary income tax rates. Long-term gains 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% 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 you 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 save 28 cents in federal tax for every dollar you spend on a tax-deductible expense, such as mortgage interest or charity.  

Note: To compute your actual income tax, please consult tax calculation worksheets in the 2016 Instructions for Form 1040 and the 2016 Tax Tables. Tax computation worksheets are also provided in 2016 edition of Publication 505, Tax Withholding and Estimated Tax.