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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 2018 federal income tax rates.

2018 Tax Rates (for taxes due April 2019)

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

Single filers

Tax rate Taxable income bracket Tax owed
10% $0 to $9,525 10% of taxable income
12% $9,526 to $38,700 $952.50 plus 12% of the amount over $9,525
22% $38,701 to $82,500 $4,453.50 plus 22% of the amount over $38,700
24% $82,501 to $157,500 $14,089.50 plus 24% of the amount over $82,500
32% $157,501 to $200,000 $32,089.50 plus 32% of the amount over $157,500
35% $200,001 to $500,000 $45,689.50 plus 35% of the amount over $200,000
37% $500,001 or more $150,689.50 plus 37% of the amount over $500,000

Married, filing jointly

Tax rate Taxable income bracket Tax owed
10% $0 to $19,050 10% of taxable income
12% $19,051 to $77,400 $1,905 plus 12% of the amount over $19,050
22% $77,401 to $165,000 $8,907 plus 22% of the amount over $77,400
24% $165,001 to $315,000 $28,179 plus 24% of the amount over $165,000
32% $315,001 to $400,000 $64,179 plus 32% of the amount over $315,000
35% $400,001 to $600,000 $91,379 plus 35% of the amount over $400,000
37% $600,001 or more $161,379 plus 37% of the amount over $600,000

Head of Household

Tax rate Taxable income bracket Tax owed
10% $0 to $13,600 10% of taxable income
12% $13,601 to $51,800 $1,360 plus 12% of the amount over $13,600
22% $51,801 to $82,500 $5,944 plus 22% of the amount over $51,800
24% $82,501 to $157,500 $12,698 plus 24% of the amount over $82,500
32% $157,501 to $200,000 $30,698 plus 32% of the amount over $157,500
35% $200,001 to $500,000 $44,298 plus 35% of the amount over $200,000
37% $500,001 or more $149,298 plus 37% of the amount over $500,000

Married, Filing Separately

Tax rate Taxable income bracket Tax owed
10% $0 to $9,525 10% of taxable income
12% $9,526 to $38,700 $952.50 plus 12% of the amount over $9,525
22% $38,701 to $82,500 $4,453.50 plus 22% of the amount over $38,700
24% $82,501 to $157,500 $14,089.50 plus 24% of the amount over $82,500
32% $157,501 to $200,000 $32,089.50 plus 32% of the amount over $157,500
35% $200,001 to $300,000 $45,689.50 plus 35% of the amount over $200,000
37% $300,001 or more $80,689.50 plus 37% of the amount over $300,000

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% $9,700 or less $19,400 or less
12% Over $9,700 Over $19,400
22% Over $39,475 Over $78,950
24% Over $84,200 Over $168,400
32% Over $160,725 Over $321,450
35% Over $204,000 Over $408,200
37% Over $510,300 Over $612,350

2019 Standard Deduction and Personal Exemption

Filing Status Deduction Amount
Single $12,200
Married Filing Jointly $24,400
Head of Household $18,350

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 15th, 2019. 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.