Tax Questions Blog
What Tax Bracket am I in?
One of the most asked questions about tax brackets by taxpayers is “what tax bracket am I in?” In order to answer this question, let’s resume our example of “What is my Tax Bracket?” If you already know how income tax brackets work and only want to find out what tax bracket you are in, please see Tax Bracket Chart.
Recap: “What is my Tax Bracket?”
Imagine that there are three tax brackets: 10%, 20%, and 30%.
- 10% tax rate applies to income from $1 to $10,000;
- 20% tax rate applies to income from $10,001 to $20,000;
- 30% tax rate applies to all income above $20,000.
Under this system, if your income is:
- $10,000 then your tax rate is 10% and you pay $1,000
- $5,000 then your tax rate is still 10% and you pay $500
Meanwhile, if you earn more than $20,000, your tax calculation will be a little more complicated (see below)
For example, if you earn $35,000, then:
- the rate on the first $10,000 would be 10%;
- the rate from $10,001 to $20,000 would be 20%; and
- the rate above that would be 30%.
Therefore, you would pay:
- $1,000 for the first $10,000 of income;
- $2,000 for the second $10,000 of income; and
- $4,500 for the last $15,000 of income;
In total, you would pay $7,500, or about 21.4% tax rate.
Please refer to individual IRS publications for further information on federal income tax brackets.
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