If you want to keep more of your money come tax time, knowing which tax bracket you’re in is critical.
If you want to keep more of your money come tax time, knowing which tax bracket you’re in is critical.
Your status and tax bracket affect more than just your IRS bill in April. It can have significant implications for your student loans as well. And of course, knowing your federal income tax rate is essential to completing your taxes correctly and getting the deductions you deserve.
Here’s what you need to know about the federal income tax rates for filing your taxes in 2019.
What are federal tax brackets?
The income brackets and tax rates can change every year, so it’s a good idea to review them annually.
The IRS taxes different portions of your income at different rates depending on how much you make each year. If you have a higher income, you’ll pay a higher rate.
For the taxes you’ll file in 2019, the tax structure and income brackets have changed dramatically, thanks to a massive tax overhaul passed by the government last year.
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The structure of seven tax brackets remain unchanged, but five brackets have now decreased:
Because your bracket depends on your income, keep in mind that income requirements for each bracket also shifted for 2019.
Federal income tax rates for 2019 filing
In the fall of the tax year, the IRS releases annual inflation adjustments, particularly those that affect the tax brackets.
Here are the most recent brackets:
How tax brackets work
The IRS doesn’t tax your income at one flat rate. Instead, you’ll be taxed at one rate up until the bracket limit, then any income after that is taxed according to the next bracket, and so on. The marginal rates only apply to slices of your income, rather than the whole chunk. The rate you pay on that last slice of your income is the one generally referred to as “your” tax bracket.
For example, if you made $10,000 and are single, you’d pay a 10% tax rate on $9,700 of your income. The remaining $300 would be taxed at the next rate, 12%. Because you paid 12% on the last part of your income, that’s your tax bracket.
