Tax Questions

[PDC ™]

Finding Your Tax Bracket
Finding your tax bracket involves two steps. First, determine your taxable income for the relevant year. Then look that number up in the relevant tax rate schedule.

Tip: If you use tax software to prepare your returns, check to see if it will generate a report that includes information about your tax bracket.

Taxable Income. You can find your taxable income for a previous year by looking at your tax return. It's clearly labeled — but not very conspicuous. Just look for the words "taxable income."
If you need to estimate your taxable income for a year in the future, the best way to start is to know your taxable income for the most recent year. Then make adjustments for changes you might anticipate: increases or decreases in income or deductions, and perhaps a change in filing status.

Tax Rate Schedules. Once you know your taxable income, you need to look it up in the appropriate tax rate schedule. This is not the same as the tax tables you use to look up your tax! Those tables give you dollar amounts but not tax rates. What you want is a schedule that tells you the tax rate as a percentage for your level of taxable income.
The IRS publishes tax rate schedules in the instructions for Form 1040, and also for 1040-ES (the form used to pay estimated tax) — but not in the instructions for Forms 1040A or 1040EZ. Current tax rate schedules for every filing status can be found in the Reference section of this web site.
Here's a sample tax rate schedule: the 2005 tax rate schedule for single filers.


Single

Taxable income is over But not over The tax is Plus Of the amount over
$0 $7,300 $0.00 10% $0
7,300 29,700 730.00 15% 7,300
29,700 71,950 4,090.00 25% 29,700
71,950 150,150 14,652.50 28% 71,950
150,150 326,450 36,548.50 33% 150,150
326,450 94,727.50 35% 326,450