How tax brackets work.

A tax bracket refers to a range of taxable income to which a certain tax rate applies. In the U.S., there are seven federal tax brackets that apply to different portions of your taxable income. For example, the first $0 to $18,550 of taxable income earned by a married couple filing jointly falls into the lowest tax bracket and is taxed at a rate of 10%. Taxable income from $18,551 to $75,300 falls into the next tax bracket, which is taxed at 15%.

This system, with different tax rates applying to various ranges of income, is called a progressive tax system.

What is a marginal tax rate?

Your marginal tax rate is the rate at which your next dollar of income is taxed. It’s important to remember that under the progressive tax system, your entire taxable income is not taxed at your marginal tax rate. Your marginal tax rate only applies to the top tier of your taxable income.

Why is it important to know my estimated tax bracket?

Knowing your marginal income tax bracket helps when you’re making decisions on things like deductions or whether municipal bonds make sense. For example, if your marginal tax bracket this year is 33%, and you claim a deduction of $2,000, it will reduce your taxes by $660. If your marginal tax bracket is 15% and you claim the same deduction, you’ll save $300.

2017 federal income tax brackets PDF

If your 2017 filing status is:

Single

If your taxable income is:
Over But not over The tax is
$0 $9,325 10.0%
$9,325 $37,950 $932.50 plus 15% of the excess over $9,325
$37,950 $91,900 $5,226.25 plus 25% of the excess over $37,950
$91,900 $191,650 $18,713.75 plus 28% of the excess over $91,900
$191,650 $416,700 $46,643.75 plus 33% of the excess over $191,650
$416,700 $418,400 $120,910.25 plus 35% of the excess over $416,700
$418,400 -------- $121,505.25 plus 39.6% of the excess over $418,400

Head of household

If your taxable income is:
Over But not over The tax is
$0 $13,350 10.0%
$13,350 $50,800 $1,335.00 plus 15% of the excess over $13,350
$50,800 $131,200 $6,952.50 plus 25% of the excess over $50,800
$131,200 $212,500 $27,527.50 plus 28% of the excess over $131,200
$212,500 $416,700 $49,816.50 plus 33% of the excess over $212,500
$416,700 $444,500 $117,202.50 plus 35% of the excess over $416,700
$444,500 -------- $129,458.00 plus 39.6% of the excess over $444,500

Married filing jointly or qualifying widow(er)

If your taxable income is:
Over But not over The tax is
$0 $18,650 10.0%
$18,650 $75,900 $1,865.00 plus 15% of the excess over $18,650
$77,400 $156,150 $10,657.50 plus 25% of the excess over $77,400
$153,100 $233,350 $29,752.50 plus 28% of the excess over $153,100
$233,350 $416,700 $52,222.50 plus 33% of the excess over $233,350
$416,700 $470,700 $112,728.00 plus 35% of the excess over $416,700
$470,700 -------- $131,628 plus 39.6% of the excess over $470,700

Married filing separately

If your taxable income is:
Over But not over The tax is
$0 $9,325 10.0%
$9,325 $37,950 $932.50 plus 15% of your income above $9,325
$37,950 $76,550 $5,226.25 plus 25% of your income above $37,950
$76,550 $116,675 $14,876.25 plus 28% of your income above $76,550
$116,675 $208,350 $26,111.25 plus 33% of your income above $116,675
$208,350 $235,350 $56,364 plus 35% of your income above $208,350
$235,350 -------- $65,814.00 plus 39.6% of your income above $235,350

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