2019 and 2020 tax brackets

[bassdge]

TAX RATE	SINGLE	HEAD OF HOUSEHOLD	MARRIED FILING JOINTLY OR QUALIFYING WIDOW	MARRIED FILING SEPARATELY
Source: IRS
10%	$0 to $9,700	$0 to $13,850	$0 to $19,400	$0 to $9,700
12%	$9,701 to $39,475	$13,851 to $52,850	$19,401 to $78,950	$9,701 to $39,475
22%	$39,476 to $84,200	$52,851 to $84,200	$78,951 to $168,400	$39,476 to $84,200
24%	$84,201 to $160,725	$84,201 to $160,700	$168,401 to $321,450	$84,201 to $160,725
32%	$160,726 to $204,100	$160,701 to $204,100	$321,451 to $408,200	$160,726 to $204,100
35%	$204,101 to $510,300	$204,101 to $510,300	$408,201 to $612,350	$204,101 to $306,175
37%	$510,301 or more	$510,301 or more	$612,351 or more	$306,176 or more

2020 federal income tax brackets

TAX RATE	SINGLE	HEAD OF HOUSEHOLD	MARRIED FILING JOINTLY OR QUALIFYING WIDOW	MARRIED FILING SEPARATELY
Source: IRS
10%	$0 to $9,875	$0 to $14,100	$0 to $19,750	$0 to $9,875
12%	$9,876 to $40,125	$14,101 to $53,700	$19,751 to $80,250	$9,876 to $40,125
22%	$40,126 to $85,525	$53,701 to $85,500	$80,251 to $171,050	$40,126 to $85,525
24%	$85,526 to $163,300	$85,501 to $163,300	$171,051 to $326,600	$85,526 to $163,300
32%	$163,301 to $207,350	$163,301 to $207,350	$326,601 to $414,700	$163,301 to $207,350
35%	$207,351 to $518,400	$207,351 to $518,400	$414,701 to $622,050	$207,351 to $311,025
37%	$518,401 or more	$518,401 or more	$622,051 or more	$311,026 or more

How do federal tax brackets work?

Tax brackets are not as intuitive as they seem because most taxpayers have to look at more than one bracket to know their tax rate.

[bassdge]

! Most people have no clue of how taxes work much less the tax brackets. Congressional budget office reports that just over 90% of all income tax is paid by the top 10% of income tax earners. Tax brackets are progressive and All tax payers pay the exact same % rate on each portion of their income according the the filing status and brackets below after the standard deduction or itemized deduction...i.e. Taxable income. So in the chart below using single status below in 2019, someone making 10k of taxable income or $1 million of taxable income will pay 10% on the first $9700 of income. The difference is the person with the $1 million is also paying 37% on the income above $510, 301 plus state tax plus the additional Medicare surtax plus the additional tax on passive income. I would welcome a live debate on tv with any democratic presidential hopeful on taxes and social security as long as factual charts could be used. I could make them all look like the liars they are deceiving the American public.

[tcesni]

The charts do not apply to long term capital gains (investment income).

[yatesville88fan]

Well the lame stream media and a certain party says the rich pay no taxes. NOT according to that chart. I used to be able to take an IRA dedication but not in the last couple tax years. And I really doubt that a lot of people that make under a million get to use these capital gains

[bassdge]

The charts do not apply to long term capital gains (investment income).

you are correct but investment income is not earned income and not all "investment income" has capital gains treatment.
example. A person makes $100,000 salary in 2019 and pays income taxes on that earned income. This person is wise and saves $10,000 for the future. Remember he already paid taxes on that so it is after tax $.
now in 2020 same person makes same $100,000 salary and pays income taxes on that $100,000 at said rates. Assume he also makes $1000 profit on his $10,000 investment from prior year ( money he had already paid taxes on). He now also has to pay tax on interest or capital gains, a profit from money that's was already taxed as income. This profit is not ordinary income and we should reward people for saving and investing for their future. He also paid more in total tax in 2020 than in 2019.

[catch5]

I still think we should have a flat tax. What would be More fair than everyone paying 20%???. No deductions, EIC, nothing. You make “x” amount you owe 20% of it. Everyone. Simple.

[bassdge]

On the other hand, long-term capital gains get favorable tax treatment. They are taxed at rates of 0%, 15%, or 20%, depending on the investor's taxable income, but these rates are generally lower than the corresponding tax brackets for all income levels.

Long-Term Capital Gains Tax Rate	Single Filers (Taxable Income)	Married Filing Jointly	Heads of Household	Married Filing Separately
0%	$0-$40,000	$0-$80,000	$0-$53,600	$0-$40,000
15%	$40,000-$441,450	$80,000-$496,600	$53,600-$469,050	$40,000-$248,300
20%	Over $441,550	Over $496,600

[bassdge]

A married couple with $70,000 income that bought a stock and the sold it for a long term capital gain of $5000 would pay ZERO PERCENT in capital gains tax.
another couple with over $500,000 of taxable income would pay 20% capital gains tax on that same $5,000 profit on a long term capital gain. If it were a short term capital gain they would pay 37% plus the potential of another 3.8% in the surcharge excess tax

[sorrybasser]

I still think we should have a flat tax. What would be More fair than everyone paying 20%???. No deductions, EIC, nothing. You make “x” amount you owe 20% of it. Everyone. Simple.

[bassdge]

$70,000 - $24,000 standard deduction = $46,000
0-19,750 @10% = $1975 tax
19,751-$80,000 @ 12% so 26250 x .12= $3150
zero capital gain on the $1000 profit = 0
$5125 tax due on 71,000 total gives effective tax rate of 7.2%

500,000 - $24000 standard deduction = 476,000
10% portion= $1975 tax
12% portion = $7260 tax
22% portion = 19976 tax
24% portion = 37332 tax
32% portion = 28192 tax
35% portion = 21455 tax
total income tax= $116,190 plus 20% on the $1000 profit on the capital gain = $117,190
$$117,190 / $501,000 = 23.2 effective tax rate

simple equation not including FICA for SS or Medicare which are not income taxes. Higher earners in retirement will get a lower percentage of social security compared to % of income used to calculate the benefit and will also pay much higher Medicare part B and part D premiums

[LewStulePH.D.]

I still think we should have a flat tax. What would be More fair than everyone paying 20%???. No deductions, EIC, nothing. You make “x” amount you owe 20% of it. Everyone. Simple.

That makes too much sense and not enough cents for 'projects' (read: agenda(s)

[grandbassslayer]

The charts do not apply to long term capital gains (investment income).

Nor should it, that money was already taxed once.

[Madmar]

You may be making this to hard. For a married filers with $70,000 in taxable would pay $8,012.

$19,400 * 10% = 1,940
$50,600 * 12% = 6,072
8,012 total taxes


The total taxable income taxed is $70,000 (19,750 + 50,250 = 70,000).

Were taxes get confusing is in the calculation of taxable income. For the above, with NO reductions from benefits in taxable federal income and using the standard deduction there federal taxable wages would be 94,000. Subtract the standard deduction of $24,000 there taxable wages would be $70,000. (94,000 - 24,000 = 70,000).

More than likely you have heard of a marginal tax rate. That is the tax rate they would pay if their income is $1 more. For the example above, if someone earned $1 more their federal taxable their total income would be $94,001. Their taxable wages would be $70,001, or $1 higher than the example above. All this means is until the total taxable income is $78,950 the tax rate stays the same they would pay a 12% tax (Note the tax bracket changes with taxable income greater than $78,950 to a marginal tax rate of 22%). Thus a margin of 12% of the increase would go to taxes.

Therefore from the example above for each additional $1 of income the tax payer would oay $0.12 (1 * 12% = $0.12) in federal taxes until the next bracket is reached based on total income.

If confused send me a pm with your phone number and I go over it with you.

[Garfish]

I still think we should have a flat tax. What would be More fair than everyone paying 20%???. No deductions, EIC, nothing. You make “x” amount you owe 20% of it. Everyone. Simple.

It would work with even less if it taxes unearned income the same.

[bware]

[MikeF]

Interesting on the percentage increases on various income levels.

The largest increases of 10%(12-22%) and 8 %(24-32%)

[MR 188 Elite]

I still think we should have a flat tax. What would be More fair than everyone paying 20%???. No deductions, EIC, nothing. You make “x” amount you owe 20% of it. Everyone. Simple.

[mossie3]

Historically, the income tax rates are just about as low as they've ever been, while at the same time debt is spirally out of control. But everyone still gripes about income taxes. That's what we do.

Historical Income Tax Rates.JPG

[pavi69]

I still think we should have a flat tax. What would be More fair than everyone paying 20%???. No deductions, EIC, nothing. You make “x” amount you owe 20% of it. Everyone. Simple.

The problem with one rate is it would probably need to be 40% to collect the same amount of revenue. Do you really believe a person who makes $20,000 a year should pay $8,000 income tax?

[ColdSVT]

So everyone here pays 37% right?

Well except for me lol