Tax Brackets For 2013

Earlier this year the IRS released the figures for the 2013 income tax brackets along with the cost of living adjustments for inflation.  Keep in mind the tax tables listed below are for the 2013 tax year that you will file in 2014.

Married Filing Jointly

 

Taxable Income:

Tax

$0-$17,850

10%

$17,851 – $72,500

$1,785 + 15% of the excess over $17,850

$72,501 – $146,400

$9,985.50 + 25% of the excess over $72,500

$146,401-$223,050

$28,457.50 +28% of the excess over $146,400

$223,051-$398,350

$49,919.50 + 33% of the excess over $223,050

$398,351-$450,000

$107,768.50 + 35% of the excess over $398,350

$450,001+

$125,846 + 39.6% of the excess over $450,000

Head of Household

 

Taxable Income:

Tax:

$0-$12,750

10%

$12,751-$48,600

$1275 + 15% of the excess over $17,850

$48,601 -$125,450

$6,652.50 + 25% of the excess over $48,600

$125,451 -$203,150

$25,865 + 28% of the excess over $125,450

$203,151 -$398,350

$47,621 + 33% of the excess over $203,150

$398,351 -$425,000

$112,037 + 35% of the excess over $398,350

$425,001+

$121,364.50 + 39.6% of the excess over $425,000

Individual Taxpayers

 

Taxable Income:

Tax:

$0-$8,925

10%

$8,926 -$36,250

$892.50 + 15% of the excess over $8,925

$36,251-$87,850

$4,991.25 + 25% of the excess over $36,250

$87,851-$183,250

$17,891.25 + 28% of the excess over $87,850

$183,251-$398,350

$44,603.25 + 33% of the excess over $183,250

$398,351 -$400,000

$115,586.25 + 35% of the excess over $398,350

$400,000+

$116,163.75 + 39.6% of the excess over $400,000

Married Filing Separate

 

Taxable Income:

Tax:

$0-$8,925

10%

$8,926 -$36,250

$892.50 + 15% of the excess over $8,925

$36,251-$73,200

$4,991.25 + 25% of the excess over $36,250

$73,201-$111,525

$14,228.75 + 28% of the excess over $73,200

$111,526-$199,175

$24,959.25 + 33% of the excess over $111,525

$199,176-$225,000

$53,884.25 + 35% of the excess over $199,175

$225,001+

$62,923 + 39.6% of the excess over $225,000

How to Find Your Tax Bracket:

To determine what tax bracket you fall in, it will be necessary to know your taxable income and your filing status.  Taxable income is your adjusted gross income minus either your standard or itemized deductions.  Let’s use Mary as an example. 

Mary is single and her taxable income is $57,000.  For the 2013 tax year Mary falls into the 3rd or 25% tax bracket; however, this does not mean that Mary’s $57,000 is taxed at 25% because we operate with a progressive tax rate.  One of the biggest misconceptions in our tax system is whatever bracket you fall in ALL of your income is taxed at that rate.  Your income is taxed as it “progresses” through the tax brackets.

Using the 2013 tax brackets for individual tax payers, Mary’s first $8,925 is taxed at a rate of 10%, Mary’s income that lands into the ranges of the second bracket is taxed at 15%, then the remainder of her income is left over, often referred to as the “last dollar” is taxed at 25%.  The calculations for Mary’s taxable income are as follows:

First Bracket:  $8,925 x 0.10 = $892.50

Second Bracket:  ($36,250 – $8,925) x 0.15 = $4,098.75

Third Bracket: ($57,000 taxable income – $36,250) x 0.25 = $5,187.50

Total Tax: $892.50 + $4,098.75 + $5,187.50 = $10,178.75

 

What Are Estimated Taxes and Who Pays Them?

Estimated taxes are the payments that are made to the IRS and your State Taxing Agency based on income you make that is not subject to withholding.  Usually any income you receive has taxes withheld from your paycheck and is then submitted to the IRS via your employer.  If you generate an income seen on the list below and expect to owe $1,000 or more when you file your tax return, you are required to make 4 quarterly estimated tax payments throughout the year.

  • Self-Employment Income (Sole Proprietor, S-Corp Shareholder, Partner)
  • Interest and Dividends
  • Alimony
  • Gains from the sale of stocks and assets
  • Prizes and Awards

To compute your estimated taxes use IRS Form 1040-ES.