Current Tax Brackets

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
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