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2019-2020 Federal Income Tax Brackets And Tax Rates

7-minute read

As we settle into the new year, it’s time to deal with last year’s taxes. Although it’s not the most fun task on your to-do list, getting your taxes done by April 15 is absolutely critical.

Before you can get started, it’s important to understand where your income falls in the tax brackets. There are seven federal tax brackets that will determine how much you need to pay in federal income tax. If you aren’t sure where you stand, it can be confusing to work on your taxes. We will cover what the tax brackets are and how to determine which tax bracket you fall into. Plus, we will explain what these brackets mean for your income taxes this year. 

How Do Tax Brackets Work?

In the United States, the tax code is based on a progressive system. Different portions of your income are taxed at various rates. As you earn more income, parts of your higher earned income will be taxed at a higher rate. This leads to people who earn a higher income paying more in taxes. However, every taxpayer pays equal taxes on each portion of their taxable income.

Currently, there are seven federal tax brackets that have tax rates of 10, 12, 22, 24, 32, 35, and 37 percent. The Tax Cuts and Jobs Act of 2017 did make some reductions to income tax rates that effectively lower the amount individuals will pay in taxes. Prior to this legislation, the 2018 tax brackets were slightly higher at 10, 15, 25, 28, 33, 35, and 39.6 percent. 

Your income will fall into federal tax brackets that are based on two factors: your taxable income and your filing status. The taxable income part is easy to determine. This is the money that you have earned minus any tax cuts or deductions. 

The second piece of the puzzle is your filing status. There are four different filing statuses that you can choose, according to the IRS: single, married filing jointly, married filing separately, and head of household. You can determine your status of married or single based on the last day of the tax year. For example, if you got married on December 31, 2019, you would be able to file as married for tax purposes. However, if you got married on January 1, 2020, you cannot file with a married status when you turn in your taxes in April 2020. 

Once you determine your tax bracket, then you can find out how much you owe in taxes to the IRS. As you work through your taxes, it’s important to remember that your taxable income will likely be taxed at several different rates. 

Let’s put this into practice!

2019-2020 Tax Bracket Example 1

For example, let’s say you’re single and you earned $65,000 worth of taxable income. That would put you in the 22% federal income tax bracket. However, that doesn’t mean that you’ll pay 22% in taxes for all of your income. In fact, you would pay much less than that total! You would pay 10% on your income up to $9,700. Next, you would pay 12% on your income between $9,701 and $39,475. Finally, you would pay 22% on the remaining portion of your income. That would lead to a total tax bill of around $12,200 instead of 22% of the total which would be $14,300. 

As another example: Let’s say you’re married filing jointly with a combined taxable income of around $70,000. That would put you in the 12% tax bracket. Again, you would not pay 12% on your entire taxable income. Instead, you would pay 10% on your income up to $19,400 and 12% on the rest of your income. With this, you would pay around $3,284 in federal income tax for the year.

2019-2020 Tax Bracket Example 2

Of course, these numbers only represent your federal income tax rate. That means the total amount you pay in taxes might be higher due to any additional state or provincial taxes. In most states, you’ll have more included in your tax bill for each tax year. 

2019 Federal Income Tax Brackets

For Taxes Filed In April 2020

Let’s take a closer look at the 2019 tax brackets.

Tax Rate

Single

Married Filing Joint

Head of Household

10%

$0 – $9,700

$0 – $19,400

$0 – $13,850

12%

$9,701 – $39,475

$19,401 – $78,950

$13,851 – $52,850

22%

$39,476 – $84,200

$78,950 – $168,400

$52,851 – $84,200

24%

$84,201 – $160,725

$168,401 – $321,450

$84,201 – $160,700

32%

$160,726 – $204,100

$321,451 – $408,200

$160,701 – $204,101

35%

$204,101 – $510,300

$408,201 – $612,350

$204,101 – $510,300

37%

$510,301 and higher

$612,351 and higher

$510,301 and higher

These are the federal tax rates for 2019. If you are married and choose to file separately, you would follow the bracket guidelines of single filers.

2020 Federal Income Tax Brackets

For Taxes Filed In April 2021

As you start to map out your earnings for 2020, you might be interested to take a look at the tax brackets for this tax year. Check them out below.

Tax Rate

Single

Married Filing Joint

Head of Household

10%

$0 – $9,875

$0 – $19,750

$0 – $14,100

12%

$9,876 – $40,125

$19,751 – $80,250

$14,101 – $53,700

22%

$40,126 – $84,525

$80,251 – $171,050

$53,701 – $85,500

24%

$85,526 – $163,300

$171,051 – $326,600

$85,501 – $163,300

32%

$163,301 – $207,350

$326,601 – $414,700

$163,301 – $207,350

35%

$207,351 – $518,400

$414,701 – $622,050

$207,351 – $518,400

37%

$518,401 and higher

$622,051 and higher

$518,401 and higher

These are the federal tax rates for 2019. If you are married and choose to file separately, then you would follow the bracket guidelines of single filers.

2018 Federal Income Tax Brackets

For Taxes Filed In April 2019

If you are interested to see how this year’s tax brackets compare to the US tax brackets of 2018, then check out the chart below.

Tax Rate

Single

Married Filing Joint

Head of Household

10%

$0 – $9,525

$0 – $19,050

$0 – $13,600

12%

$9,526 – $38,700

$19,051 – $77,400

$13,601 – $51,800

22%

$38,701 – $82,500

$77,401 – $165,000

$51,801 – $82,500

24%

$82,501 – $157,500

$165,001 – $315,000

$82,501 – $157,500

32%

$157,501 – $200,000

$315,001 – $400,000

$157,501 – $200,000

35%

$200,001 – $500,000

$400,001 – $600,000

$200,001 – $500,000

37%

$500,000 and higher

$600,001 and higher

$500,001 and higher

Although there are not too many major changes, you’ll notice that the tax brackets adjust to compensate for increasing inflation each year.

How To Get Into A Lower Federal Income Tax Bracket

Now that you know which tax bracket you fall into, you might be worried about your upcoming tax bill. It’s possible to move into a lower tax bracket using two different tax strategies. If you’re able to move into a lower tax bracket, then you may stand to gain hundreds of dollars on your yearly tax bill. 

If you’re interested in pursuing one of these options, consider talking to a tax professional. They will be able to dive into more details and determine whether one of these options is a good fit for your situation. 

Tax Deductions

If you qualify for any tax deductions, it makes sense to include these in your tax calculations.

The standard deduction is what anyone can take if they do not want to itemize, or list out, all of their deductions. Most people choose to take the standard deduction, which we cover below. 

The standard deduction for 2019 is:

  • $12,200 for single filers and married filers filing separately
  • $24,400 for married people filing joint
  • $18,350 for any heads of household

The standard deduction for 2020 is:

  • $12,400 for single filers and married filers filing separately
  • $24,800 for married people filing joint
  • $18,650 for any heads of household

In most cases, it will make sense to take the standard deduction. But if you have tax deductions that will surpass the standard deduction, it might be worth the effort. You may even be able to sufficiently lower your income to qualify for a lower tax bracket. 

A few examples of tax deductions that you might want to itemize include your home mortgage interest, charitable contributions, your state taxes, your provincial taxes, and any expenses that are necessary to running your business. If you have more itemizable deductions than the standard deduction, it might make sense to itemize your deductions. However, you should talk to a tax professional to assess your situation before pursuing this option. 

Tax Credits

Tax credits are a second way to lower your total tax bill if you qualify for one. In this case, you would not reduce your total taxable income or affect your tax bracket but you can use these credits to offset any taxes that you owe. For example, if you owed $10,000 in taxes but qualified for a $3,000 tax credit then you would only be responsible for paying $7,000 of your tax bill.

There are many different types of tax credits. A few common ones include:

  • Child tax credit
  • Earned income tax credit
  • Adoption tax credit
  • Residential energy tax credit
  • Renter’s tax credit

This is not an exhaustive list. You should talk to a tax professional to determine if you qualify for a tax credit. 

Final Thoughts On Federal Income Tax Brackets

As you file your taxes for 2019, take a minute to determine your tax bracket with your income and filing status. This will give you a better idea of what you should expect to pay at tax time. The IRS will reassess the tax brackets each year, so never assume that your tax liabilities will remain exactly the same year after year.

If you are earning more money this year, you should expect to pay more in taxes. Since the federal income tax is progressive, your entire income will not be taxed at the same rate. However, the more you earn, the more you will be required to pay in income taxes. 

Consult with a tax professional to determine if you’re eligible for tax credits or if you should itemize your deductions to reduce your tax bill.

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