Federal income tax brackets change every year so it’s good to know which tax bracket applies to you and for the current tax year. The charts below represent 2020 tax brackets for income received in 2020 and to be filed by April 15, 2021.
2020 Federal Income Tax Brackets (for taxes due April 15, 2021)
| Tax Rate | Single | Married, filing jointly | Married, filing separately | Head of Household |
| 10% | $0 – $9,875 | $0 – $19,750 | $0 – $9,875 | $0 – $14,100 |
| 12% | $9,876 – $40,125 | $19,751 – $80,250 | $9,876 – $40,125 | $14,101 – $53,700 |
| 22% | $40,126 – $85,525 | $80,251 – $171,050 | $40,126 – $85,525 | $53,701 – $85,500 |
| 24% | $85,526 – $163,300 | $171,051 – $326,600 | $85,526 – $163,300 | $85,501 – $163,300 |
| 32% | $163,301 – $207,350 | $326,601 – $414,700 | $163,301 – $207,350 | $163,301 – $207,350 |
| 35% | $207,351 – $518,400 | $414,701 – $622,050 | $207,351 – $311,025 | $207,351 – $518,400 |
| 37% | $518,401 or more | $622.051 or more | $311,026 or more | $518,401 or more |
How tax brackets work?
There are many factors that go into your final tax calculation such as your total taxable income, deductions and credits that are discussed here. You can use the table above to get a general idea of which tax bracket you’re in and estimate how much tax you are supposed to pay for tax year 2020. The calculation can get very complex but at it’s most basic level, the IRS divides your income into different brackets and taxes each bracket based on the tax rate for that bracket. Of course, it’s always best to seek the help of a tax professional.
EXAMPLE. Let’s assume a taxpayer, Michael, is single with no dependents other than himself. Michael has $50,000 of W-2 taxable income from his job. Michael files as a single filer and is therefore subject to the tax rates in the ‘Single’ column.
Let’s calculate his taxes based on the 2020 tax brackets above…
The first $9,875 of Michael’s income will be taxed at 10% so $987.50 ($9,875 x 10%).
The amount above $9,876 up to $40,125 will be taxed at 12% so $3,629.88 ([$40,125 – $9,876] x 12%).
Any amount above $40,126 up to $85,525 will be taxed at 22% but Michael’s taxable income is $50,000 so we’ll only include tax up to that amount, giving us $2,172.28 ([$50,000 – $39,475] x 22%).
Adding all of that up we get a total tax of $6,789.66 ($987.50 + $3,629.88 + $2,172.28).
In the example above, Michael would have to pay $6,789.66 in taxes on his $50,000 of taxable income. Because he is a W-2 employee, his employer most likely withheld taxes during the year. The amount of taxes withheld during the year will determine if Michael overpaid his taxes (refund) or underpaid (taxes owed).
If you have questions or would like to discuss tax or accounting matters with us, please email us at colin@horsfordcpa.com or call us at (347) 201-2045.