Federal Income Tax Rates for Tax Year 2016

Federal tax rates can apply to different income thresholds each year

Not everyone is taxed at the same rate. The U.S. tax code is set up so that someone who earns $30,000 a year doesn't pay the same percentage of income on their top dollar as someone who earns $150,000. Income is divided into tax brackets, and a percentage rate applies to each bracket and the corresponding segment of income.

These percentage rates began at 10% in 2016 and gradually increased to 15%, 25%, 28%, 33%, 35%, and finally a top rate of 39.6%. The dollar thresholds for these tax brackets depended on your filing status.

The following tax rates and tax brackets apply only to tax year 2016. These bracket thresholds are adjusted periodically for inflation, and the Tax Cuts and Jobs Act (TCJA) made additional—and somewhat significant—changes effective tax year 2018. As of 2021, the federal tax rates are 10%, 12%, 22%, 24%, 32%, 35%, and the top rate has dropped to 37%.

The 2016 Tax Brackets 

The charts below show tax rates in the first column, followed by the beginning and ending income perimeters for each tax bracket. 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 tax breaks that you might be entitled to.

If you're a single individual and you earned $90,000 a year in 2016, you'd fall into the 25% tax bracket, but you wouldn't pay that rate on all your income. You'd actually pay only 10% on the portion of your income that fell between $0 and $9,275, and you'd pay 15% on the portion between $9,276 and $37,650. That 25% tax rate would apply only to the balance of your income.

These numbers have been rounded off to the nearest dollar for simplicity's sake.

Ordinary Tax Rates for Single Filing Status

From Up to Rate Tax Total Tax
$0 $9,275 × 0.10 $927 $927
9,276 37,650 × 0.15 4,256 5,183
37,651 91,150 × 0.25 13,375 18,558
91,151 190,150 × 0.28 27,720 46,278
190,151 413,350 × 0.33 73,656 119,934
413,351 415,050 × 0.35 $595 120,529
415,051 -- × 0.396    

The tax and total tax in the final row would depend upon how much of your income fell into the 39.6% bracket—how much did you earn over $415,050?

Calculating Your Effective Tax Rate—An Example

If you're single and you earned $100,000 in 2016, the effective tax rate math would work out like this:

  • The first $9,275 would be taxed at a rate of 10%, for a total of $927.
  • The next $27,825 of your income, that which falls between $9,276 and $37,650, is multiplied by 15%, arriving at a tax of $4,256. 
  • The next $53,449 of your income, that which falls between $37,651 and $91,150, is taxed at 25%, for a tax of $13,375.
  • Finally, the balance of your income over $91,150 and up to your total income of $100,000 falls into the 28% bracket. Tax on this portion of your income—$8,850—works out to $2,478. 

Add each segment together to come up with a total tax liability of $21,036.

Ordinary Tax Rates for Head of Household Filing Status

From Up to Rate Tax Total Tax
$0 $13,250 × 0.10 $1,325 $1,325
13,251 50,400 × 0.15 5,572 6,897
50,401 130,150 × 0.25 19,937 26,834
130,151 210,800 × 0.28 22,582 49,416
210,801 413,350 × 0.33 66,841 116,257
413,351 441,000 × 0.35 9,677 125,934
441,001 -- × 0.396    

Ordinary Tax Rates for Married Filing Separately Filing Status

From Up to Rate Tax Total Tax
$0 $9,275 × 0.10 $927 $927
9,276 37,650 × 0.15 4,256 5,183
37,651 75,950 × 0.25 9,575 14,758
75,951 115,725 × 0.28 11,137 25,895
115,726 206,675 × 0.33 30,013 55,908
206,676 233,475 × 0.35 9,380 65,288
233,476 -- × 0.396    

Ordinary Tax Rates for Married Filing Jointly and Qualifying Widow or Widower

From Up to Rate Tax Total Tax
$0 $18,550 × 0.10 $1,855  $1,855
18,551 75,300 × 0.15 8,512 10,367
75,301 151,900 × 0.25 19,150 29,517
151,901 231,450 × 0.28 22,274

51,791

231,451 413,350 × 0.33 60,027 111,818
413,351 466,950 × 0.35 18,760 130,578
466,951 -- × 0.396    

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% on wages and on self-employment income up to the annual Social Security wage base, which was $118,500 in 2016. This wage base increases periodically to keep up with inflation. It's $142,800 in 2021. Income beyond this threshold is not subject to the Social Security tax.
  • Medicare tax at a rate of 2.9% on wages and self-employment income. There is no wage base for Medicare.

These taxes apply to most earners, but most workers don't pay the entire tax themself. Only self-employed workers must pay the full percentage of both taxes. Collectively, this is referred to as the self-employment tax. Taxpayers employed by others pay only half these percentages, and their employers pay the other half.

The Additional Medicare Tax

Some high-income taxpayers pay an Additional Medicare Tax of 0.9%. The thresholds for which these liabilities kick in are:

  • $250,000 for those married filing jointly
  • $200,000 for single, head of household, and qualifying widow(er)s
  • $125,000 for married filing separately

The Alternative Minimum Tax or AMT

Some high-income taxpayers can use deductions and credits to significantly reduce their tax bills. That's why Congress introduced an Alternative Minimum Tax (AMT)—to help ensure that all Americans pay a minimum tax rate. In 2016, the AMT was set at 26% of income up to $186,300 ($93,150 if married filing separately). After that threshold, the AMT became 28%.

The Net Investment Income Tax

A tax of 3.8% applies to the lower of net investment income or modified adjusted gross income over the following thresholds:

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

Capital Gains Taxes 

Capital gains tax rates apply whenever you sell an asset for more than your tax basis in it. Your tax basis is what you paid for it plus any costs of sale or improvements you made. This 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. They're taxed at ordinary income tax rates—your tax bracket rate for your other income.

Long-term gains apply to assets you held for more than a year. These profits and qualified dividends were taxed at the following rates in 2016:

  • 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 and qualified small business stock (small business stock must be held for five years to qualify for this rate—not just one)

IRS Publication 505 helps taxpayers calculate their liability from investment gains.

The TCJA gave long-term capital gains their own tax rates in 2018. These rates are no longer tied to your marginal tax bracket. They're now tied to their own income thresholds.

The information contained in this article is not tax or legal advice and is not a substitute for such advice. State and federal laws change frequently, and the information in this article may not reflect your own state’s laws or the most recent changes to the law. For current tax or legal advice, please consult with an accountant or an attorney.