Saturday, December 23, 2017

2017 Tax Reform: New Income Tax Rates & Brackets

Experienced Tax AccountantTo determine regular tax liability, an individual uses the appropriate tax rate schedule (or IRS-issued income tax tables for taxable income of less than $100,000). The Code provides four tax rate schedules for individuals based on filing status—i.e., single, married filing jointly/surviving spouse, married filing separately, and head of household—each of which is divided into income ranges which are taxed at progressively higher marginal tax rates as income increases. Under pre-Act law, individuals were subject to six tax rates: 10%, 15%, 25%, 28%, 33%, 35%, and 39.6%.
New law. For tax years beginning after Dec. 31, 2017 and before Jan. 1, 2026, seven tax rates apply for individuals: 10%, 12%, 22%, 24%, 32%, 35%, and 37%. The Act also provides four tax rates for estates and trusts: 10%, 24%, 35%, and 37%. (Code Sec. 1(i), as amended by Act Sec. 11001) The specific application of these rates, and the income brackets at which they apply, is shown below.
         FOR MARRIED INDIVIDUALS FILING JOINT RETURNS
      AND SURVIVING SPOUSES:
If taxable income is:                 The tax is:
--------------------                  -----------
Not over $19,050                      10% of taxable income
Over $19,050 but not                  $1,905 plus 12% of the
  over $77,400                          excess over $19,050
Over $77,400 but not                  $8,907 plus 22% of the
  over $165,000                         excess over $77,400
Over $165,000 but not                 $28,179 plus 24% of the
  over $315,000                         excess over $165,000
Over $315,000 but not                 $64,179 plus 32% of the
  over $400,000                         excess over $315,000
Over $400,000 but not                 $91,379 plus 35% of the
  over $600,000                       excess over $400,000
Over $600,000                         $161,379 plus 37% of the
                                        excess over $600,000
    FOR SINGLE INDIVIDUALS (OTHER THAN HEADS OF HOUSEHOLDS AND
         SURVIVING SPOUSES):
If taxable income is:                 The tax is:
--------------------                  ----------
Not over $9,525                       10% of taxable income
Over $9,525 but not                   $952.50 plus 12% of the
  over $38,700                           excess over $9,525
Over $38,700 but not                  $4,453.50 plus 22% of the
  over $82,500                           excess over $38,700
Over $82,500 but not                  $14,089.50 plus 24% of the
  over $157,500                          excess over $82,500
Over $157,500 but not                 $32,089.50 plus 32% of the
  over $200,000                          excess over $157,000
Over $200,000 but not                 $45,689.50 plus 35% of the
  over $500,000                          excess over $200,000
Over $500,000                         $150,689.50 plus 37% of the
                                         excess over $500,000
         FOR HEADS OF HOUSEHOLDS:
If taxable income is:                 The tax is:
--------------------                  -----------
Not over $13,600                      10% of taxable income
Over $13,600 but not                  $1,360 plus 12% of the
  over $51,800                           excess over $13,600
Over $51,800 but not                  $5,944 plus 22% of the
  over $82,500                          excess over $51,800
Over $82,500 but not                  $12,698 plus 24% of the
  over $157,500                          excess over $82,500
Over $157,500 but not                 $30,698 plus 32% of the
  over $200,000                          excess over $157,500
Over $200,000 but not                 $44,298 plus 35% of the
  over $500,000                          excess over $200,000
Over $500,000                         $149,298 plus 37% of the
                                         excess over $500,000
    FOR MARRIEDS FILING SEPARATELY:
If taxable income is:                 The tax is:
--------------------                  ----------
Not over $9,525                       10% of taxable income
Over $9,525 but not                   $952.50 plus 12% of the
  over $38,700                           excess over $9,525
Over $38,700 but not                  $4,453.50 plus 22% of the
  over $82,500                           excess over $38,700
Over $82,500 but not                  $14,089.50 plus 24% of the
  over $157,500                          excess over $82,500
Over $157,500 but not                 $32,089.50 plus 32% of the
  over $200,000                          excess over $157,500
Over $200,000 but not                 $45,689.50 plus 35% of the
  over $300,000                          excess over $200,000
Over $300,000                         $80,689.50 plus 37% of the
                                         excess over $300,000
             FOR ESTATES AND TRUSTS:
If taxable income is:                 The tax is:
---------------------                 -----------
Not over $2,550                       10% of taxable income
Over $2,550 but not                   $255 plus 24% of the
  over $9,150                            excess over $2,550
Over $9,150 but not                   $1,839 plus 35% of the
  over $12,500                            excess over $9,150
Over $12,500                          $3,011.50 plus 37% of the
                                         excess over $12,500
We're here to help! For no obligation free consultation contact us today!

Amare Berhie, Senior Accountant  

(651) 300-4777

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