Tax Rates


2016 Income Tax Brackets
The Federal income tax has 7 brackets: 10%, 15%, 25%, 28%, 33%, 35%, and 39.6%. The amount of tax you owe depends on your income level and filing status.

It’s important to understand that moving into a higher tax bracket does not mean that all of your income will be taxed at a higher rate. Instead, only the money that you earn within a particular bracket is subject to that particular tax rate.

Single Taxpayers
Standard Deduction $6,300
Exemption $4,050
Taxable Income Tax Rate
$0—$9,275 10%
$9,276—$37,650 $927.50 plus 15% of the amount over $9,275
$37,651—$91,150 $5,183.75 plus 25% of the amount over $37,650
$91,151—$190,150 $18,558.75 plus 28% of the amount over $91,150
$190,151—$ 413,350 $46,278.75 plus 33% of the amount over $190,150
$413,351—$415,050 $119,934.75 plus 35% of the amount over $413,350
$415,051 or more $415,051 or more $120,529.75 plus 39.6% of the amount over $415,050

Married Filing Jointly or Qualifying Widow(er)
Taxable Income Tax Rate
$0—$18,550 10%
$18,551—$75,300 $1,855 plus 15% of the amount over $18,550
$75,301—$151,900 $10,367.50 plus 25% of the amount over $75,300
$151,901—$231,450 $29,517.50 plus 28% of the amount over $151,900
$231,451—$413,350 $51,791.50 plus 33% of the amount over $231,450
$413,351—$466,950 $111,818.50 plus 35% of the amount over $413,350
$466,951 or more $130,578.50 plus 39.6% of the amount over $466,950

Married Filing Separately
Taxable Income Tax Rate
$0—$9,275 10%
$9,276—$37,650 $927.50 plus 15% of the amount over $9,275
$37,651—$75,950 $5,183.75 plus 25% of the amount over $37,650
$75,951—$115,725 $14,758.75 plus 28% of the amount over $75,950
$115,726—$206,675 $25,895.75 plus 33% of the amount over $115,725
$206,676—$233,475 $55,909.25 plus 35% of the amount over $206,675
$233,476 or more $65,289.25 plus 39.6% of the amount over $233,475

Head of Household
Taxable Income Tax Rate
$0—$13,250 10%
$13,251—$50,400 $1,325 plus 15% of the amount over $13,250
$50,401—$130,150 $6,897.50 plus 25% of the amount over $50,400
$130,151—$210,800 $26,835 plus 28% of the amount over $130,150
$210,801—$413,350 $49,417 plus 33% of the amount over $210,800
$413,351—$441,000 $116,258.50 plus 35% of the amount over $413,350
$441,001 or more $125,936 plus 39.6% of the amount over $441,000

2016 Personal Exemption Amounts
For tax year 2016, the personal exemption amount is $4,050 (compared to $4,000 in 2015).
You are allowed to claim one personal exemption for yourself and one for your spouse (if married). However, if somebody else can list you as a dependent on their tax return, you are not permitted to claim a personal exemption for yourself.
The personal exemption amount “phases out” for taxpayers with higher incomes. The Personal Exemption Phaseout (PEP) thresholds are as follows:

Filing Status PEP Threshold Starts PEP Threshold Ends
Single $259,400 $381,900
Married Filing Jointly $311,300 $433,800
Married Filing Separately $155,650 $216,900
Head of Household $285,350 $407,850

2016 Standard Deduction Amounts
There are two main types of tax deductions: the standard deduction and itemized deductions. You can claim one type of deduction on your tax return, but not both.
For example, if you claim the standard deduction, you cannot itemize deductions – and vice versa (if you itemize deductions, you cannot claim the standard deduction). You are allowed to use whichever type of deduction results in the lowest tax.
The standard deduction is subtracted from your Adjusted Gross Income (AGI), thereby reducing your taxable income. For tax year 2016, the standard deduction amounts are as follows:

Filing Status Standard Deduction
Single $6,300
Married Filing Jointly $12,600
Married Filing Separately $6,300
Head of Household $9,300
Qualifying Widow(er) $12,600

Note that there is an additional standard deduction for elderly or blind taxpayers, which is $1,250 for tax year 2016. The additional standard deduction amount increases to $1,550 if the individual is also unmarried and not a qualifying widow(er).

Trust & Estates Tax Rates Table
If taxable income is: The tax is:
Not over $2,500 15% of the taxable income
Over $2,500 but not over $5,900 $375 plus 25% of the excess over $2,500
Over $5,000 but not over $9,050 $1,225 plus 28% of the excess over $5,900
Over $9,050 but not over $12,300 $2,107 plus 33% of the excess over $9,050
Over $12,300 $3,179.50 plus 39.6% of the excess over $12,300

Social Security
Social Security Tax Rate: Employers 6.2%

Social Security Tax Rate: Employees 6.2%

Social Security Tax Rate: Self-Employed 12.4%

Maximum Taxable Earnings $118,500

Medicare Base Salary Unlimited

Medicare Tax Rate 1.45%

Additional Medicare Tax for income above $200,000 (single filers) or $250,000 (joint filers) 0.9%

Medicare tax on net investment income ($200,000 single filers, $250,000 joint filers) 3.8%

Miscellaneous
2016 Tax Rates
Personal Exemption $4,050
Business expensing limit: Cap on equipment purchases $2,000,000

Business expensing limit: New and Used Equipment and Software $500,000

Prior-year safe harbor for estimated taxes of higher-income 110% of your 2016 tax liability

Standard mileage rate for business driving 54 cents

Standard mileage rate for medical/moving driving 19 cents

Standard mileage rate for charitable driving 14 cents

Child Tax Credit $1,000

Unearned income maximum for children under 19 before kiddie tax applies $1,050

Maximum capital gains tax rate for taxpayers in the 10% or 15% bracket 0%

Maximum capital gains tax rate for taxpayers above the 15% bracket but below the 39.6% bracket 15%

Maximum capital gains tax rate for taxpayers in the 39.6% bracket 20%

Capital gains tax rate for unrecaptured Sec. 1250 gains 25%

Capital gains tax rate on collectibles 28%

Maximum contribution for Traditional/Roth IRA $5,500 if under age 50
$6,500 if 50 or older

Maximum employee contribution to SIMPLE IRA $12,500 if under age 50
$15,500 if 50 or older

Maximum Contribution to SEP IRA 25% of eligible compensation
up to $53,000

401(k) maximum employee contribution limit $18,000 if under age 50
$24,000 if 50 or older

Estate tax exemption $5,450,000

Annual Exclusion for Gifts $14,000

Education
American Opportunity Credit (Hope) $2,500

Lifetime Learning Credit $2,000

Student Loan Interest Deduction $2,500

Coverdell Education Savings Contribution $2,000

Standard Meal Rates for Family Child Care Providers for 2016 income tax returns
Continental U.S.
For each breakfast $1.31

For each lunch or supper $2.46

For each snack (up to 3 per day for each child) $0.73

Alaska
For each breakfast $2.09

For each lunch or supper $3.99

For each snack (up to 3 per day for each child) $1.19

Hawaii
For each breakfast $1.53

For each lunch or supper $2.88

For each snack (up to 3 per day for each child) $0.86


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