Jimenez & Associates, Inc.
 Jimenez & Associates, Inc. 

US IncomeTax Rates and Brackets

2019 Income Tax Brackets and Rates

 

In 2019, the income limits for all tax brackets and all filers will be adjusted for inflation and will be as follows (Tables 1). The top marginal income tax rate of 37 percent will hit taxpayers with taxable income of $510,300 and higher for single filers and $612,350 and higher for married couples filing jointly.

 

Table 1. Tax Brackets and Rates, 2019
Rate For Unmarried Individuals, Taxable Income Over For Married Individuals Filing Joint Returns, Taxable Income Over For Heads of Households, Taxable Income Over
10% $0 $0 $0
12% $9,700 $19,400 $13,850
22% $39,475 $78,950 $52,850
24% $84,200 $168,400 $84,200
32% $160,725 $321,450 $160,700
35% $204,100 $408,200 $204,100
37% $510,300 $612,350 $510,300
 

Standard Deduction and Personal Exemption

 

The standard deduction for single filers will increase by $200 and by $400 for married couples filing jointly (Table 2).

 

The personal exemption for 2019 remains eliminated.

 

Table 2. 2019 Standard Deduction and Personal Exemption

Filing Status                                   Deduction Amount
Single $12,200
Married Filing Jointly $24,400
Head of Household $18,350

 

Alternative Minimum Tax

 

The Alternative Minimum Tax (AMT) was created in the 1960s to prevent high-income taxpayers from avoiding the individual income tax. This parallel tax income system requires high-income taxpayers to calculate their tax bill twice: once under the ordinary income tax system and again under the AMT. The taxpayer then needs to pay the higher of the two.

 

The AMT uses an alternative definition of taxable income called Alternative Minimum Taxable Income (AMTI). To prevent low- and middle-income taxpayers from being subject to the AMT, taxpayers are allowed to exempt a significant amount of their income from AMTI. However, this exemption phases out for high-income taxpayers. The AMT is levied at two rates: 26 percent and 28 percent.

 

The AMT exemption amount for 2019 is $71,700 for singles and $111,700 for married couples filing jointly (Table 3).

 

Table 3. 2019 Alternative Minimum Tax Exemptions

Filing Status Exemption Amount
Unmarried Individuals $71,700
Married Filing Jointly $111,700

 

In 2019, the 28 percent AMT rate applies to excess AMTI of $194,800 for all taxpayers ($97,400 for married couples filing joint returns).

 

AMT exemptions phase out at 25 cents per dollar earned once taxpayer AMTI hits a certain threshold. In 2019, the exemption will start phasing out at $510,300 in AMTI for single filers and $1,020,600 for married taxpayers filing jointly (Table 4).

 

Table 4. 2019 Alternative Minimum Tax Exemption Phaseout Thresholds

Filing Status Threshold
Unmarried Individuals $510,300
Married Filing Jointly $1,020,600

 

Earned Income Tax Credit

 

The maximum Earned Income Tax Credit in 2019 for single and joint filers is $529, if the filer has no children (Table 5). The maximum credit is $3,526 for one child, $5,828 for two children, and $6,557 for three or more children. All these are relatively small increases from 2018.

 

Table 5. 2019 Earned Income Tax Credit Parameters

Filing Status   No Children One Child Two Children Three or More Children
Single or Head of Household Income at Max Credit $6,920 $10,370 $14,570 $14,570
Maximum Credit $529 $3,526 $5,828 $6,557
Phaseout Begins $8,650 $19,030 $19,030 $19,030
Phaseout Ends (Credit Equals Zero) $15,570 $41,094 $46,703 $50,162
           
Married Filing Jointly Income at Max Credit $6,920 $10,370 $14,570 $14,570
Maximum Credit $529 $3,526 $5,828 $6,557
Phaseout Begins $14,450 $24,820 $24,820 $24,820
Phaseout Ends (Credit Equals Zero) $21,370 $46,884 $52,493 $55,952
 

Child Tax Credit

 

The child tax credit totals at $2,000 per qualifying child and is not adjusted for inflation. However, the refundable portion of the Child Tax Credit, also known as the Additional Child Tax Credit, is adjusted for inflation. The Additional Child Tax Credit will remain at $1,400 for 2019.

 

Capital Gains

 

Long-term capital gains are taxed using different brackets and rates than ordinary income.

Table 6. 2019 Capital Gains Brackets
  For Unmarried Individuals, Capital Gains Over For Married Individuals Filing Joint Returns, Capital Gains Over For Heads of Households, Capital Gains Over
0% $0 $0 $0
15% $39,375 $78,750 $52,750
20% $434,550 $488,850 $461,700

 

Qualified Business Income Deduction (Sec. 199A)

The Tax Cuts and Jobs Act includes a 20 percent deduction for pass-through businesses against up to $160,700 of qualified business income for unmarried taxpayers and $321,400 for married taxpayers (Table 7).

 

Table 7. 2019 Qualified Business Income Deduction Thresholds

Filing Status Threshold
Unmarried Individuals $160,700
Married Filing Jointly $321,400

 

Annual Exclusion for Gifts

 

In 2019, the first $15,000 of gifts to any person are excluded from tax. The exclusion is increased to $155,000 for gifts to spouses.

2018 Income Tax Brackets and Rates

2017 Income Tax Brackets and Rates

 

In 2017, the income limits for all tax brackets and all filers will be adjusted for inflation and will be as follows (Table 1). The top marginal income tax rate of 39.6 percent will hit taxpayers with taxable income of $418,400 and higher for single filers and $470,700 and higher for married couples filing jointly.

 

 Single Taxable Income Brackets and Rates, 2017

 

Rate

Taxable Income Bracket

Tax Owed

10%

$0 to $9,325

10% of Taxable Income

15%

$9,325 to $37,950

$932.50 plus 15% of the excess over $9325

25%

$37,950 to $91,900

$5,226.25 plus 25% of the excess over $37,950

28%

$91,900 to $191,650

$18,713.75 plus 28% of the excess over $91,900

33%

$191,650 to $416,700

$46,643.75 plus 33% of the excess over $191,650

35%

$416,700 to $418,400

$120,910.25 plus 35% of the excess over $416,700

39.60%

$418,400+

$121,505.25 plus 39.6% of the excess over $418,400

 

 

 Married Filing Joint Taxable Income Brackets and Rates, 2017

 

Rate

Taxable Income Bracket

Tax Owed

10%

$0 to $18,650

10% of taxable income

15%

$18,650 to $75,900

$1,865 plus 15% of the excess over $18,650

25%

$75,900 to $153,100

$10,452.50 plus 25% of the excess over $75,900

28%

$153,100 to $233,350

$29,752.50 plus 28% of the excess over $153,100

33%

$233,350 to $416,700

$52,222.50 plus 33% of the excess over $233,350

35%

$416,700 to $470,700

$112,728 plus 35% of the excess over $416,700

39.60%

$470,700+

$131,628 plus 39.6% of the excess over $470,700

 

 

Head of Household Taxable Income Brackets and Rates, 2017

 

Rate

Taxable Income Bracket

Tax Owed

10%

$0 to $13,350

10% of taxable income

15%

$13,350 to $50,800

$1,335 plus 15% of the excess over $13,350

25%

$50,800 to $131,200

$6,952.50 plus 25% of the excess over $50,800

28%

$131,200 to $212,500

$27,052.50 plus 28% of the excess over $131,200

33%

$212,500 to $416,700

$49,816.50 plus 33% of the excess over $212,500

35%

$416,700 to $444,500

$117,202.50 plus 35% of the excess over $416,701

39.60%

$444,500+

$126,950 plus 39.6% of the excess over $444,550

Source: IRS.

 

Standard Deduction and Personal Exemption

 

The standard deduction for single filers will increase by $50 and $100 for married couples filing jointly.

 

The personal exemption for 2017 remains the same at $4,050.

 

 2017 Standard Deduction and Personal Exemption

 

Filing Status

Deduction Amount

Single

 $6,350

Married Filing Jointly

 $12,700

Head of Household

 $9,350

Personal Exemption

 $4,050

Source: IRS.


PEP and Pease

 

PEP and Pease are two provisions in the tax code that increase taxable income for high-income earners. PEP is the phaseout of the personal exemption and Pease (named after former Senator Donald Pease) phases out the value of most itemized deductions once a taxpayer’s adjusted gross income reaches a certain amount.

 

The income threshold for both PEP and Pease will increase from last year to $261,500 for single filers and $318,800 for married couples filing jointly (Tables 5 and 6). PEP will end at $384,000 for singles and $436,300 for married couples filing jointly (both will increase from 2016), meaning that taxpayers with AGI above these limits will no longer benefit from personal exemptions.

 

2017 Pease Limitations on Itemized Deductions

 

Filing Status

Income

Single

 $261,500

Married Filing Jointly

 $318,800

Head of Household

 $287,650

Married Filing Separately

 $156,900

Source: IRS.

 

2017 Personal Exemption Phaseout

Filing Status

Phaseout Begins

Phaseout Complete

Single

 $261,500

 $384,000

Married Filing Jointly

 $313,800

 $436,300

Head of Household

 $287,650

 $410,150

Married Filing Separately

 $156,900

 $218,150

Source: IRS.

 

Alternative Minimum Tax

 

The Alternative Minimum Tax (AMT) was created in the 1960s to prevent high-income taxpayers from avoiding the individual income tax. This parallel tax income system requires high-income taxpayers to calculate their tax bill twice: once under the ordinary income tax system and again under the AMT. The taxpayer then needs to pay the higher of the two.

 

The AMT uses an alternative definition of taxable income called Alternative Minimum Taxable Income (AMTI). To prevent low- and middle-income taxpayers from being subject to the AMT, taxpayers are allowed to exempt a significant amount of their income from AMTI. However, this exemption phases out for high-income taxpayers. The AMT is levied at two rates: 26 percent and 28 percent.

 

The AMT exemption amount for 2017 is $54,300 for singles and $84,500 for married couples filing jointly.

 

 2017 Alternative Minimum Tax Exemptions

 

Filing Status

Exemption Amount

Single

 $54,300

Married Filing Jointly

 $84,500

Married Filing Separately

 $42,250

Trusts & Estates

 $24,100

Source: IRS.

 

In 2017, the 28 percent AMT rate applies to excess AMTI of $187,800 for all taxpayers ($93,900 for married couples filing joint returns).

 

Under current law, AMT exemptions phase out at 25 cents per dollar earned once taxpayer AMTI hits a certain threshold. In 2017, the exemption will start phasing out at $120,700 in AMTI for single filers and $160,900 for married taxpayers filing jointly.

 

2017 Alternative Minimum Tax Exemption Phaseout Thresholds

Filing Status

Threshold

Single

 $120,700

Married Filing Jointly

 $160,900

Married Filing Separately, Estates and Trusts

 $80,450

 

Earned Income Tax Credit

 

2017’s maximum Earned Income Tax Credit for singles, heads of households, and joint filers is $510, if the filer has no children (Table 9). The credit is $3,400 for one child, $5,616 for two children, and $6,318 for three or more children. All of the aforementioned are relatively small increases from 2016.

 

2016 Tax Year

 

The top tax rate of 39.6% now applies to single taxpayers earning more than $415,050 ($466,950 for married taxpayers filing jointly)—up from the 2015 thresholds of $413,200 and $464,850, respectively.

 

Here are the other major adjustments:

 

If you’re single…

 

If your taxable income is… You owe…
$0-$9,275 10% of your taxable income
$9,275-$37,650 $927.50 + 15% of anything over $9,275
$37,650-$91,150 $5,183.75 + 25% of anything over $37,650
$91,150-$190,150 $18,558.75 + 28% of anything over $91,150
$190,150-$413,350 $46,278.75 + 33% of anything over $190,150
$413,350-$415,050 $119,934.75 + 35% of anything over $413,350
$415,050 and higher $120,529.75 + 39.6% of anything over $415,050

 

If you’re married filing jointly or are a surviving spouse…

 

If your taxable income is… You owe…
$0-$18,550 10% of your taxable income
$18,550-$75,300 $1,855 + 15% of anything over $18,550
$75,300-$151,900 $10,367.50 + 25% of anything over $75,300
$151,900-$231,450 $29,517.50 + 28% of anything over $151,900
$231,450-$413,350 $51,791.50 + 33% of anything over $231,450
$413,350-$466,950 $111,818.50 + 35% of anything over $413,350
$466,950 and higher $130,578.50 + 39.6% of anything over $466,950

 

If you’re a head of household…

 

If your taxable income is… You owe…
$0-$13,250 10% of your taxable income
$13,250-$50,400 $1,325 + 15% of anything over $13,250
$50,400-$130,150 $6,897.50 + 25% of anything over $50,400
$130,150-$210,800 $26,835 + 28% of anything over $130,150
$210,800-$413,350 $49,417 + 33% of anything over $210,800
$413,350-$441,000 $116,258.50 + 35% of anything over $413,350
$441,000 and higher $125,936 + 39.6% of anything over $441,000

 

For 2016 the standard deduction for heads of household will also rise to $9,300 (up from $9,250 in 2015) but the other standard deduction amounts will remain the same: $6,300 for singles and $12,600 for married couples filing jointly.

 

Personal exemptions will be $4,050 in 2016, up from $4,000 in 2015. The Alternative Minimum Tax exemption amount in 2016 is $53,900 for singles and $83,800 for married couples filing jointly (up by $300 and $400, respectively, compared to 2015 exemptions).

Other key changes include:

  • The maximum Earned Income Credit amount is $6,269 for taxpayers filing jointly who have 3 or more qualifying children in 2016, up from $6,242 for 2015.
  • The monthly limit for the transportation benefits remains $130 for transportation, but rises to $255 for qualified parking in 2016, up from $250 for tax year 2015.
  • The foreign earned income exclusion is $101,300 for 2016, up from $100,800 in 2015.

 

Net Investment Income Tax

 

A 3.8 percent Net Investment Income Tax (NIIT) applies to individuals, estates, and trusts that have net investment income above applicable threshold amounts.

 

Individuals

 

In the case of an individual, the NIIT is 3.8 percent on the lesser of:

  • the net investment income, or
  • the excess of modified adjusted gross income over the following threshold amounts:
    • $250,000 for married filing jointly or qualifying widow(er) with dependent child
    • $125,000 for married filing separately
    • $200,000 in all other cases

 

Estates & Trusts

 

In the case of an estate or trust, the NIIT is 3.8 percent on the lesser of:

  • (A) the undistributed net investment income, or
  • (B) the excess (if any) of:
    • the adjusted gross income over the dollar amount at which the highest tax bracket begins for an estate or trust for the tax year. (For estates and trusts, the 2015 threshold is $12,300)

 

Additional Medicare Tax

 

A 0.9% Additional Medicare Tax applies to Medicare wages, self-employment income, and railroad retirement (RRTA) compensation that exceed the following threshold amounts based on filing status:

  • $250,000 for married filing jointly;
  • $125,000 for married filing separately; and
  • $200,000 for all other taxpayers.

 

This additional tax is used to help fund the Affordable Care Act tax provisions, including the Premium Tax Credit.

 

Combine Medicare wages and self-employment income to determine if income exceeds the threshold. Do not consider a self-employment loss for purposes of this tax. Compare Railroad retirement (RRTA) compensation separately to the threshold.

 

All Medicare wages, railroad retirement (RRTA) compensation, and self-employment income subject to Medicare Tax are subject to Additional Medicare Tax, if paid in excess of the applicable threshold for the taxpayer’s filing status. For more information on what wages are subject to Medicare Tax, see the chart on Special Rules for Various Types of Services and Payments in Section 15 of Publication 15, (Circular E), Employer’s Tax Guide.

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