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If you’ve ever paid taxes, you’ve probably asked, what are “income taxes” anyway? The oversimplified version - personal income taxes are the government’s top source of revenue to fund various public services; they are what helps the government operate. In the U.S., taxes are imposed federally, and by most states and many local governments.

How much you owe is based on how much income you make in a year (in addition to applicable deductions, etc.). By income, we mean hourly and salary wages, tips, interest, dividends, and more. Individuals pay taxes (you can file jointly with a spouse/partner) and entities (like businesses) pay corporate taxes. Generally, the tax you owe is a calculation based on your taxable income (minus certain deductions or credits), multiplied by the applicable tax rate. Below are the 2017 federal income tax rates.

2017 Federal Income Tax Rates

Click the rates you want to see to expand the chart.

Individual Taxpayers

Rate If Taxable Income is Between: The Tax Due is:
10% 0 - $9,325 10% of taxable income
15% $9,326 - $37,950 $932.50 + 15% of the amount over $9,325
25% $37,951 - $91,900 $5,226.25 + 25% of the amount over $37,950
28% $91,901 - $191,650 $18,713.75 + 28% of the amount over $91,900
33% $191,651 - $416,700 $46,643.75 + 33% of the amount over $191,650
35% $416,701 - $418,400 $120,910.25 + 35% of the excess over $416,700
39.6% $418,401+ $121,505.25 + 39.6% of the amount over $418,400

Married Filing Jointly & Surviving Spouses

Rate If Taxable Income is Between: The Tax Due is:
10% 0 - $18,650 10% of taxable income
15% $18,651 - $75,900 $1,865 + 15% of the amount over $18,650
25% $75,901- $153,100 $10,452.50 + 25% of the amount over $75,900
28% $153,101- $233,350 $29,752.50 + 28% of the amount over $153,100
33% $233,351- $416,700 $52,222.50 + 33% of the amount over $233,350
35% $416,701 - $470,700 $112,728 + 35% of the excess over $416,700
39.6% $470,701+ $131,628 + 39.6% of the amount over $470,700

Head of Household

Rate If Taxable Income is Between: The Tax Due is:
10% 0 - $13,350 10% of taxable income
15% $13,351- $50,800 $1,335 + 15% of the amount over $13,350
25% $50,801 - $131,200 $6,952.50 + 25% of the amount over $50,800
28% $131,201 - $212,500 $27,052.50 + 28% of the amount over $131,200
33% $212,501 - $416,700 $49,816.50 + 33% of the amount over $212,500
35% $416,701 - $444,550 $117,202.50 + 35% of the excess over $416,700
39.6% $444,551+ $131,628 + 39.6% of the amount over $444,550

Married Filing Separately

Rate If Taxable Income is Between: The Tax Due is:
10% 0 - $9,325 10% of taxable income
15% $9,326 - $37,950 $9.32.50 + 15% of the amount over $9,325
25% $37,951 - $76,550 $5,226.25 + 25% of the amount over $37,950
28% $76,551- $116,675 $14,876.25 + 28% of the amount over $76,550
33% $116,676 - $208,350 $26,111.25 + 33% of the amount over $116,675
35% $208,351 - $235,350 $56,364 + 35% of the excess over $208,350
39.6% $235,351+ $65,814 + 39.6% of the amount over $235,350

Standard Deduction Amounts

Filing Status Deduction Amount
Single $6,350
Married Filing Jointly $12,700
Head of Household $9,350
Married Filing Separately $6,350

Via the IRS

In December 2017, the government modified federal income tax rates. The new rates will apply to the 2018 tax year. You can see the newly defined tax rates in the charts below.

2018 Federal Income Tax Rates

Rate Individuals Married Filing Jointly
10% Up to $9,525 Up to $19,050
12% $9,525 to $38,700 $19,051 to $77,400
22% $38,701 to $82,500 $77,401 to $165,000
24% $82,501 to $157,500 $165,001 to $315,000
32% $157,501 to $200,000 $315,001 to $400,000
35% $200,001 to $500,000 $400,001 to $600,000
37% Over $500,000 Over $600,000

2018 Standard Deduction and Personal Exemption

Filing Status Deduction Amount
Single $12,000
Married Filing Jointly $24,000
Head of Household $18,000

Via TaxFoundation.org

Which states do not have income tax?

Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming do not have state income taxes.

When is the last day to file taxes?

Tax day for individuals to file a Form 1040 is April 17th, 2018. If you file an extension, that date will change. If you must pay corporate taxes, see those dates here.

Do I have to file taxes?

Is there a minimum amount of money you have to make in year that requires you to pay taxes? The answer depends on your age, filing status, and your gross income for the year you’re filing (“gross” meaning total income without deductions, like expenses). The chart below should help answer basic questions.

Filing Status Minimum Income
Single $10,400 if you’re under age 65
$11,950 if you’re 65 or older
Married filing jointly $20,800 if you and your spouse are under age 65
$22,050 if one of you is under age 65 and the other is older than age 65
$23,300 if both are age 65 or older
Head of household $13,400 if you’re under age 65
$18,000 if you’re age 65 or older
Married filing separately $4,050 for all ages
$5 if your spouse is itemizing deductions
Qualifying widow(er) with dependent child $16,750 if you’re over age 65
$18,000 if you’re age 65 or older

Via H&R Block

Fun Fact: Technically, the tax system is voluntary. Come again? Basically, it’s because the federal government doesn’t calculate what you owe and then automatically take that amount out of your bank account without your permission. You calculate what you owe and voluntarily pay the IRS, even though the actual paying part is not optional. You can face penalties if you don’t file a return, or if you fudge the numbers on how much you made or overstate your deductions. Tricky.

We know this sounds complicated, and that’s because it is. So, this is not intended as legal advice, but only as insight into tax regulations. If you have tax questions, consult a tax professional. Speaking of which, did you know XcelHR helps businesses comply with tax laws and regulations? You don’t say? It’s true, and you can learn more here.