2006 Tax Rate Schedules

How would these rates apply to your 2006 income?

Filling out paperwork
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It sometimes happens that taxpayers have to go back to previous years' returns for one reason or another. Maybe you're just wondering if you made a mistake, or maybe you missed filing a return entirely for some reason. Even if you just want to compare current tax rates to what they were several years ago, it can help to understand how tax brackets work. 

Federal tax rates increase progressively as income rises; these rates apply only to the income in each tax bracket range and only to ordinary, taxable income.

Non-taxable income includes things like tax-free interest on municipal bonds, above-the-line adjustments, itemized deductions or the standard deduction, and personal and dependent exemptions. Your taxable income will almost always be less than your total income.

Capital gains are taxed at different tax rates.

These are the tax rates that apply to income earned in the 2006 tax year. The bracket percentages typically don't change much from year to year unless Congress steps in to tweak them, but the income ranges they cover are typically adjusted more frequently to keep pace with inflation. The income ranges also change according to filing status. 

Single Filing Status

  • 10 percent on income between $0 and $7,550
  • 15 percent on the income between $7,550 and $30,650 plus $755.00
  • 25 percent on the income between $30,650 and $74,200 plus $4,220.00
  • 28 percent on the income between $74,200 and $154,800 plus $15,107.50
  • 33 percent on the income between $154,800 and $336,550 plus $37,675.50
  • 35 percent on the income over $336,550 plus $97,653.00

Married Filing Jointly or Qualifying Widow(er) Filing Status

  • 10 percent on the income between $0 and $15,100
  • 15 percent on the income between $15,100 and $61,300 plus $1,510.00
  • 25 percent on the income between $61,300 and $123,700 plus $8,440.00
  • 28 percent on the income between $123,700 and $188,450 plus $24,040.00
  • 33 percent on the income between $188,450 and $336,550 plus $42,170.00
  • 35 percent on the income over $336,550 plus $91,043.00

Married Filing Separately Filing Status

  • 10 percent on the income between $0 and $7,550
  • 15 percent on the income between $7,550 and $30,650 plus $755.00
  • 25 percent on the income between $30,650 and $61,850 plus $4,220.00
  • 28 percent on the income between $61,850 and $94,225 plus $12,020.00
  • 33 percent on the income between $94,225 and $168,275 plus $21,085.00
  • 35 percent on the income over $168,275 plus $45,521.50

Head of Household Filing Status

  • 10 percent on the income between $0 and $10,750
  • 15 percent on the income between $10,750 and $41,050 plus $1,075.00
  • 25 percent on the income between $41,050 and $106,000 plus $5,620.00
  • 28 percent on the income between $106,000 and $171,650 plus $21,857.50
  • 33 percent on the income between $171,650 and $336,550 plus $40,239.50
  • 35 percent on the income over $336,550 plus $94,656.50

A Tax Calculation Example

This breakdown is admittedly complicated and confusing, so here's an example to put it in clearer terms. We'll say that Mary is a single taxpayer with $350,000 of taxable income.

Her income would be taxed in each of the tax brackets this way:

  • $755.00 (tax on the first $7,550 of Mary's income at the 10 percent rate) plus
  • $3,465.00 (tax on the income between $7,550 and $30,650 at the 15 percent rate) plus
  • $10,887.50 (tax on the income between $30,650 and $74,200 at the 25 percent rate) plus
  • $22,568.00 (tax on the income between $74,200 and $154,800 at the 28 percent rate) plus
  • $59,977.50 (tax on the income between $154,800 and $336,550 at the 33 percent rate) plus
  • $4,707.50 (tax on the income over $336,550 at the 35 percent rate) for a grand total tax of
  • $102,360.50.

Rounding up, Mary's income tax bill is $102,361. It consists of $4,707.50 tax on the amount over $336,550—the income in the 35 percent tax bracket—plus $97,653.00, which is the tax on income in the lower tax brackets.

Mary's marginal tax rate is 35 percent, representative of her total taxable income which puts her in that 35 percent tax bracket. But her average tax rate is 29 percent—her total tax divided by her taxable income. On average, Mary is paying only 29 cents for every dollar of taxable income she earns. Her average tax rate is lower than her marginal tax rate because the majority of her income is taxed at the lower tax rates.

A Change for Higher Income Taxpayers

Congress added a new tax bracket at a quite significant 39.6 percent as part of legislation that was passed in 2013. This tax bracket was intended to affect only those with substantial incomes. It applied to taxable dollars in excess of $400,000 for single filers, $425,000 for those who qualified as head of household, and $450,000 for married couples who filed jointly. It was not in effect in 2006, and the thresholds for this tax bracket have risen to $418,400, $444,550 and $470,700 respectively as of 2017. 

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.