Federal Income Tax Rates for the Year 2016

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

The United States federal government taxes personal income using a graduated scale.

Personal income tax rates start at 10% and gradually increase to 15%, then 25%, then 28%, then 33%, then 35%, and finally reaching a top rate of 39.6%.

Each tax rate applies to a specific range of income. This range is called a tax bracket. Where each tax bracket begins and ends varies depending on a person's filing status.

Tax rates also vary depending on the type of income a person has. Ordinary tax rates apply to most types of income. A separate tax rate schedule applies to income from long-term capital gains and qualified dividends.

Let's first get an overview of all the tax rates for the year 2016. The chart below shows the ordinary tax rates (first column) and the rates for long-term gains and qualified dividends (second column). The rest of the columns show the beginning and end of each tax bracket, grouped by filing status. It's important to note that the dollar amounts represent taxable income -- which is total worldwide income after various deductions have been subtracted.

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 overtoTaxable 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--

 

Tax rate charts can also be separated out by filing status.

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 

This format of the tax rate chart (shown above) emphasizes the mechanics of how to calculate the federal income tax. To use this chart, we start by figuring out a person's taxable income. Then we use the first two columns to find the range in which the taxable income falls. Once we find the relevant row, we then work across the row from left to right.

Once we identify the relevant row, we write in the amount of taxable income in column (a). We then perform the subtraction in column (c), and perform a multiplication in column (e). To this number, we add the amount in column (f) to find the federal income tax liability in column (g).

To phrase this another way, we take 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). We multiply this amount by the tax rate for that bracket (columns d and e). This is the amount of tax on the income within that tax bracket. To this amount, we add the cumulative federal tax on income that falls in the lower tax rates (column f).

This results in the total amount of federal income tax (column g).

  • It's important to point out that this chart only displays the ordinary income tax rates. Using this chart (or similar charts in Publication 505), we are assuming that all income is subject to the ordinary tax rates.
  • To calculate the tax when a person has long-term capital gains or qualified dividends, use Worksheet 2-7 in combination with the tax rate charts (Worksheet 1-6), both of which are found in Publication 505, Tax Withholding and Estimated Tax (pdf).

For example, suppose that Edith, a single person, has taxable income of $100,000. This falls within the fourth tax bracket (which ranges from $91,150 to $190,150 of taxable income). Assuming that all of Edith's income is subject to the 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. Edith's taxable income falls within the 28% tax bracket. Her income over $91,150 is taxed at the 28% rate. The rest of her income is taxed at the lower 10%, 15%, and 25% rates. Edith's effective or average tax rate is her tax liability divided by her taxable income, or 21,036.75 / 100,000 = 21.03675%. This effective tax rate is a blend of all the tax rates that apply to her income.

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

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

Social Security Tax at a rate of 12.4% on wages and self-employment income up to the annual Social Security wage base of $118,500.

Medicare Tax at a rate of 2.9% on wages and self-employment income.

Additional Medicare Tax at a rate of 0.9% 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)

For Married Filing Separately:

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

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

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

Net investment income tax at a rate of 3.8% 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 vary depending 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 taxed at

  • 0% if taxable income falls in the 10% or 15% marginal tax brackets
  • 15% if taxable income falls in the 25%, 28%, 33%, or 35% marginal tax brackets
  • 20% if taxable income falls in the 39.6% marginal tax bracket
  • 25% on Depreciation Recapture
  • 28% on Collectibles
  • 28% 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 will pay on the extra income you earn. For a taxpayer in the 25% tax bracket, extra income will be taxed at 25% until the taxpayer's income reaches the next tax bracket of 28%.

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

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

Be aware that 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 2016 are published by the Internal Revenue Service in Revenue Procedure 2015-53 (pdf).

Note: To compute your actual income tax, please consult tax calculation worksheets in the 2016 Instructions for Form 1040 and the 2016 Tax Tables (not yet available). Tax computation worksheets are also provided in 2016 edition of Publication 505, Tax Withholding and Estimated Tax (not yet available).

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