The United States federal income tax system is a progressive tax system, which means that the tax rates increase as taxable income increases. The tax brackets for a given year determine the tax rates that apply to different levels of income. For the 2020 tax year, the IRS has released the following tax brackets:
2020 Federal Income Tax Brackets
| Filing Status | Income Tax Bracket | Tax Rate |
|---|---|---|
| Single | $0 – $9,875 | 10% |
| Single | $9,876 – $40,125 | 12% |
| Single | $40,126 – $85,525 | 22% |
| Single | $85,526 – $163,300 | 24% |
| Single | $163,301 – $207,350 | 32% |
| Single | $207,351 – $518,400 | 35% |
| Single | $518,401 or more | 37% |
| Married Filing Jointly | $0 – $19,750 | 10% |
| Married Filing Jointly | $19,751 – $80,250 | 12% |
| Married Filing Jointly | $80,251 – $171,050 | 22% |
| Married Filing Jointly | $171,051 – $326,600 | 24% |
| Married Filing Jointly | $326,601 – $414,700 | 32% |
| Married Filing Jointly | $414,701 – $622,050 | 35% |
| Married Filing Jointly | $622,051 or more | 37% |
| Head of Household | $0 – $14,100 | 10% |
| Head of Household | $14,101 – $53,700 | 12% |
| Head of Household | $53,701 – $85,500 | 22% |
| Head of Household | $85,501 – $163,300 | 24% |
| Head of Household | $163,301 – $207,350 | 32% |
| Head of Household | $207,351 – $518,400 | 35% |
| Head of Household | $518,401 or more | 37% |
Standard Deduction and Personal Exemption
In addition to the tax brackets, the standard deduction and personal exemption also affect the amount of taxes owed. The standard deduction is a specific amount of income that is deducted from taxable income before taxes are calculated. The personal exemption is a specific amount of income that is exempt from taxation. For the 2020 tax year, the standard deduction and personal exemption are as follows:
| Filing Status | Standard Deduction | Personal Exemption |
|---|---|---|
| Single | $12,400 | $0 |
| Married Filing Jointly | $24,800 | $0 |
| Head of Household | $18,650 | $0 |
Alternative Minimum Tax (AMT)
The AMT is a parallel tax system that is designed to ensure that high-income taxpayers pay a minimum amount of taxes. The AMT has its own set of tax brackets and rates, which are different from the regular income tax brackets. For the 2020 tax year, the AMT exemption amounts are as follows:
| Filing Status | AMT Exemption Amount |
|---|---|
| Single | $72,900 |
| Married Filing Jointly | $113,400 |
Earned Income Tax Credit (EITC)
The EITC is a tax credit that is available to low- and moderate-income working individuals and families. The amount of the EITC depends on the taxpayer’s income, filing status, and number of qualifying children. For the 2020 tax year, the maximum EITC amounts are as follows:
| Filing Status | No Children | One Child | Two Children | Three or More Children |
|---|---|---|---|---|
| Single or Head of Household | $538 | $3,584 | $5,920 | $6,660 |
| Married Filing Jointly | $538 | $3,584 | $5,920 | $6,660 |
Child Tax Credit (CTC)
The CTC is a tax credit that is available to taxpayers who have qualifying children. The amount of the CTC depends on the taxpayer’s income, filing status, and number of qualifying children. For the 2020 tax year, the maximum CTC amount is $2,000 per qualifying child.
Capital Gains Tax Rates
Capital gains are profits from the sale of assets, such as stocks, bonds, and real estate. Capital gains are taxed at different rates than ordinary income. For the 2020 tax year, the capital gains tax rates are as follows:
| Taxable Income Over | Tax Rate |
|---|---|
| $0 | 0% |
| $40,000 | 15% |
| $441,450 | 20% |
Additional Net Investment Income Tax
The additional net investment income tax is a 3.8% tax on net investment income for high-income taxpayers. Net investment income includes interest, dividends, and capital gains. For the 2020 tax year, the additional net investment income tax applies to taxpayers with MAGIs above the following thresholds:
| Filing Status | MAGI Threshold |
|---|---|
| Single | $200,000 |
| Married Filing Jointly | $250,000 |
Qualified Business Income Deduction (Sec. 199A)
The qualified business income deduction is a deduction for pass-through business income. Pass-through business income is income that is passed through to the owners of the business and taxed on their individual income tax returns. For the 2020 tax year, the qualified business income deduction is 20% of qualified business income, up to the following thresholds:
| Filing Status | Threshold |
|---|---|
| Single | $163,300 |
| Married Filing Jointly | $326,600 |
Annual Exclusion for Gifts
The annual exclusion for gifts is the amount of money that can be given to another person without having to pay gift tax. For the 2020 tax year, the annual exclusion for gifts is $15,000 per person.
The 2020 tax brackets and other tax provisions are complex and can be difficult to understand. However, it is important to be aware of these provisions so that you can make informed decisions about your taxes. If you have any questions about your taxes, you should consult with a tax professional.
Tax Brackets Explained For Beginners in The USA
FAQ
What are the tax brackets for 2020 to tax?
|
Tax rate
|
Single
|
Married filing jointly or qualifying widow
|
|
12%
|
$9,876 to $40,125
|
$19,751 to $80,250
|
|
22%
|
$40,126 to $85,525
|
$80,251 to $171,050
|
|
24%
|
$85,526 to $163,300
|
$171,051 to $326,600
|
|
32%
|
$163,301 to $207,350
|
$326,601 to $414,700
|
What are all 7 tax brackets?
What are the tax deductions for 2020?
How do I figure out my taxable income for 2020?
What is the highest tax bracket for 2020?
If your taxable income for 2020 is $50,000 as a single filer, that puts you in the 22% tax bracket, because you earn more than $40,125 but less than $85,525. This is known as your marginal tax rate. Marginal tax rate is the tax rate you pay on your last dollar of income in other words the highest rate you pay.
Are there different tax brackets for ordinary income in 2020?
. There are seven tax brackets for most ordinary income for the 2020 tax year: 10%, 12%, 22%, 24%, 32%, 35% and 37%. Your tax bracket depends on your taxable income and your filing status: single, married filing jointly or qualifying widow (er), married filing separately and head of household.
What is the taxable income for the single filing status in 2020?
In 2020, the income limits for all tax brackets and all filers will be adjusted for inflation and will be as follows (Table 1). The top marginal income tax rate of 37 percent will hit taxpayers with taxable income of $518,400 and higher for single filers and $622,050 and higher for married couples filing jointly.
How does your taxable income affect your tax bracket?
Your tax bracket depends on your taxable income and your filing status: single, married filing jointly or qualifying widow (er), married filing separately and head of household. Generally, as you move up the pay scale, you also move up the tax scale.