![]() There are seven marginal tax rates in the current individual income tax system. TWEET THIS What Are the Current Marginal Tax Rates? A single individual with taxable income of $27,800 would pay 10 percent on the first $9,700 and 12 percent on the next $18,099. For example, in 2019, taxable income from $9,700 to $39,475 was taxed at a marginal rate of 12 percent for single individuals. The rate applied to each range of taxable income is referred to as the “marginal” rate. Tax brackets are (inflation-adjusted) ranges of taxable income that are subject to tax at a specified rate. The remaining 12 percent of taxpayers itemize their deductions, which means that their taxable income is adjusted based on specific financial activities such as charitable contributions and mortgage interest payments. For example, 88 percent of taxpayers take the standard deduction, which allows them to reduce their income by a fixed amount - $12,550 for single taxpayers and $25,100 for married couples filing jointly for 2021. ![]() Wealthier individuals tend to have capital gains, dividends, and interest earnings that account for a larger share of their total income. Most people derive the majority of their income from wages and salaries. Individuals are taxed on income from a variety of sources, such as wages from a job, Social Security benefits, and capital gains. The amount of income tax that is owed by each individual is partially determined by a series of tax brackets and marginal tax rates. The federal government collects roughly half of its revenues by taxing individuals based on their incomes. How Is Income Taxed in the United States? Let’s look at how marginal tax rates and brackets work, and what the system - and potential changes to it - means for Americans. The Tax Cuts and Jobs Act (TCJA) made important changes to those rates, which affect millions of individual filers. As Tax Day approaches, there is continuing discussion about the United States tax code - and especially marginal income tax rates.
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