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 his 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%.

Where each of these tax brackets began and ended depended on your filing status. Congress adjusts the tax rates and the incomes that correspond with them periodically. 

NOTE: The following tax rates and tax brackets apply only to tax year 2016. They've been adjusted periodically for inflation since that time, and the Tax Cuts and Jobs Act (TCJA) made additional and somewhat significant changes effective tax year 2018. As of 2019, 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
9,27637,650× 0.154,2565,183 
37,65191,150× 0.2513,37518,558 
91,151190,150× 0.2827,72046,278 
190,151413,350× 0.3373,656119,934
413,351415,050× 0.35$595120,529.
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 the 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.

    Here's how it breaks down for other filing statuses.

    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
    13,25150,400× 0.155,5726,897 
    50,401130,150× 0.2519,937 26,834
    130,151210,800× 0.2822,58249,416 
    210,801413,350× 0.3366,841 116,257
    413,351441,000× 0.359,677125,934 
    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
    9,27637,650× 0.154,256 5,183
    37,65175,950× 0.259,57514,758 
    75,951115,725× 0.2811,137 25,895
    115,726206,675× 0.3330,01355,908
    206,676233,475× 0.359,38065,288
    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
    18,55175,300× 0.15 8,51210,367 
    75,301151,900× 0.25 19,15029,517  
    151,901231,450× 0.28  22,274  51,791
    231,451413,350× 0.33 60,027  111,818
    413,351466,950× 0.3518,760  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 $132,900 in 2019. Only income you earn up to this amount is 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 pretty much to all earners, but the self-employed 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. Their employers pay the other half. 

    The Additional Medicare Tax

    This tax applies at a rate of 0.9% on wages and self-employment income over the following thresholds as of 2016:

    • 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 were married and filing a separate return in 2016: 

    • 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

    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): $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 property you held for more than a year. These profits and qualified dividends were taxed at the following rates in 2016:

    • 0.0% 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

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

    NOTE: The TCJA gave long-term capital gains their own tax rates in 2018. These rates are no longer tied to your marginal tax bracket. 

    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.