Current Tax Brackets

Before you go, we thought you'd like these...
Before you go close icon
For 2008, the six income tax rates for individual taxpayers are 10%, 15%, 25%, 28%, 33%, and 35%.
In addition to cutting tax rates, the Economic Growth and Tax Relief Reconciliation Act (EGTRRA) of 2001 created the 10% tax bracket for lower incomes.
In 2007 for single taxpayers and married persons filing a separate return, the first $8,025 of income is taxed at this rate. For married persons filing a joint return, the first $16,050 is taxed at 10%. For persons filing as head of household, the first $11,450 is taxed at the 10% rate.
It helps to think of your tax rate in terms of a marginal tax rate. This is the tax rate on the last dollar of income that you earned. As your taxable income increases, you are taxed at a higher tax rate as a result of being bumped into a higher income tax bracket.
The following tables show the cutoff points in taxable income for 2008 that mark each income tax bracket:
Table A: Single tax return:
If taxable
income is:
Amount of tax
that you owe is:
More than:However, not over:This amount
(or %)
plus % of:
Amount over:
$0
$7,55010%--
$8,025$32,550$803 + 15% $8,025
$32,550
$78,850$4,481 + 25% $32,550
$78,850$164,550$16,056 + 28% $78,850
$164,550$357,700$40,052 + 33%$164,550
$357,700--$103,792 + 35%$357,700

Table B: Married Filing Jointly (MFJ) or Qualifying Widow(er):
If taxable
income is:
Amount of tax
that you owe is:
More than:However, not over:This amount
(or %)
plus % of:
Amount over:
$0
$16,05010%--
$16,050$65,100$1,605 + 15% $16,050
$65,100
$131,450$8,963 + 25%$65,100
$131,450$200,300$25,550 + 28% $131,450
$200,300$357,700$44,828 + 33%$200,300
$357,700--$86,770 + 35%$357,700

Table C: Head of Household tax return:
If taxable
income is:
Amount of tax
that you owe is:
More than:However, not over:This amount
(or %)
plus % of:
Amount over:
$0
$11,45010%--
$11,450$43,650$1,145 + 15% $11,450
$43,650
$112,650$5,975 + 25%$43,650
$112,650$182,400$23,225 + 28% $112,650
$182,400$357,700$44,828 + 33%$200,300
$357,700--$96,770 + 35%$357,700

Table D: Married Filing Separate (MFS) return:
If taxable
income is:
Amount of tax
that you owe is:
More than:However, not over:This amount
(or %)
plus % of:
Amount over:
$0
$8,02510%--
$8,025$32,550$803 + 15% $8,025
$32,550
$65,725$4,481 + 25%$32,550
$65,725$100,150$12,775 + 28% $65,725
$100,150$178,850$22,414 + 33%$100,150
$178,850--$48,385 + 35%$178,850

For example, say you file a single return and have taxable income of $40,000 in 2008. Using Table A, above, your tax liability would be $4,481 plus 25% of income above $32,550, or $7,450 in your case. That works out to be $1,863 for a total federal income tax liability of $6,344.
To prevent you from being bumped into the next-higher bracket as a result of a cost-of-living wage increase, the IRS adjusts upward the amount of income that can be earned for each tax bracket every year. This phenomenon of being bumped into the next-higher tax bracket is sometimes called "bracket creep."
2008-07-21 17:03:58
Read Full Story

Sign up for Breaking News by AOL to get the latest breaking news alerts and updates delivered straight to your inbox.

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

From Our Partners