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What Are the 2019 Tax Brackets?

Matthew Frankel, CFP, The Motley Fool

The IRS has announced its inflation-adjusted tax brackets for the 2019 tax year, and as you might expect, all of the income thresholds have increased a bit from 2018. Here's a guide to the 2019 U.S. tax brackets and how they are used to calculate your income tax.

To be perfectly clear, these are the tax brackets for the 2019 tax year, which is the tax return you'll file in 2020. If you're looking for the tax brackets that you'll use when filing your tax return in 2019, you'll need to check out a guide to the 2018 tax brackets .

U.S. tax forms on top of hundred-dollar bills.

Image Source: Getty Images.

The 2019 U.S. tax brackets

Since the Tax Cuts and Jobs Act's major tax-bracket overhaul went into effect for the 2018 tax year, there aren't any structural changes for 2019. There are still seven tax brackets, and the seven marginal tax rates -- 10%, 12%, 22%, 24%, 32%, 35%, and 37% -- remain unchanged.

However, the income ranges for each bracket have been adjusted for inflation. So with that in mind, here's a guide to the 2019 tax brackets for the four major tax filing statuses:

Marginal Tax Rate

Single

Married Filing Jointly

Head of Household

Married Filing Separately

10%

$0-$9,700

$0-$19,400

$0-$13,850

$0-$9,700

12%

$9,701-$39,475

$19,401-$78,950

$13,851-$52,850

$9,701-$39,475

22%

$39,476-$84,200

$78,951-$168,400

$52,851-$84,200

$39,476-$84,200

24%

$84,201-$160,725

$168,401-$321,450

$84,201-$160,700

$84,201-$160,725

32%

$160,726-$204,100

$321,451-$408,200

$160,701-$204,100

$160,726-$204,100

35%

$204,101-$510,300

$408,201-$612,350

$204,101-$510,300

$204,101-$306,175

37%

Over $510,300

Over $612,350

Over $510,300

Over $306,175

Data Source: IRS.

What is taxable income?

The tax brackets in the previous section are applied to your taxable income, so here's a quick explanation of where this number comes from.

  • First, your income from all sources is added together. This is known as your gross income.
  • Next, certain adjustments to your gross income can be applied. Available adjustments to income for 2018 and 2019 include contributions to qualified retirement accounts, up to $2,500 in student loan interest, and educator classroom expenses up to $250, to name a few of the most common. This produces your adjusted gross income, or AGI.
  • From your AGI, your applicable tax deductions are applied to calculate your taxable income. Taxpayers can either use the standard deduction or itemize their deductible expenses for the year -- whichever is more beneficial to them. This taxable income figure that is left after accounting for deductions is the number that is applied to the tax brackets.

Finally, it's also worth mentioning that a few types of income, particularly qualified dividends and long-term capital gains , are taxed according to different rates.

How the marginal tax bracket system works

Fortunately, you're not likely to ever have to calculate your federal income tax by hand. The vast majority of Americans use electronic methods of filing that calculate their tax for them, and even if you're among the relative few who still file a paper tax return, the IRS provides tax tables that make determining your tax easier.

Having said that, in case you were wondering how our tax system works, the IRS uses marginal tax brackets when determining the amount of tax you owe.

Here's how this works. Let's say that you're single and have taxable income of $100,000 in 2019. According to the chart, this puts you in the 24% bracket. However, you won't pay 24% of your entire taxable income. Each marginal tax rate applies only to income within that range.

In other words, on $100,000 in taxable income, a single taxpayer would pay:

  • 10% of the first $9,700 ($970)
  • 12% of the amount greater than $9,700 up to $39,475 ($3,573)
  • 22% of the amount greater than $39,475, up to $84,200 ($9,839.50)
  • 24% of the amount in excess of $84,200 ($3,972)

If you add up all of the numbers in parentheses, you'll see that this hypothetical taxpayer would owe federal income tax of $18,174.50 for 2019. This translates to about 18% of their taxable income -- not the 24% marginal tax rate.

How the U.S. tax brackets will change in 2020 and beyond

Unless a major overhaul of the U.S. tax code is passed, like in late 2017, the marginal tax rates don't change from year to year. In other words, unless a new tax law is passed, you'll still have seven tax brackets in 2020, with rates ranging from 10% to 37%, as you see in the table.

However, the income ranges within the tax brackets are adjusted annually to keep up with inflation. For example, the 37% tax bracket will kick in at approximately the same level of purchasing power each year.

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