Federal Income Tax Rates
for U.S. Taxpayers
The United States has a "progressive" income tax system; income tax rates, or tax brackets, increase in tiers as taxpayer taxable incomes increase. With this tiered system, individuals with lower taxable incomes benefit with lower percentage tax rates, while individuals with larger taxable incomes are subjected to the higher percentage tax rates.
Example: Suppose there are four tax brackets: 10% for taxable incomes from $1 to $15,000; 15% for taxable incomes between $15,001 to $25,000; 20% for taxable incomes between $25,001 to $35,000; and 25% for all taxable income above $35,000. With this type of tax system, an individual with $10,000 of taxable income would pay 10% (or $1,000) in income tax. However, someone with $30,000 of taxable income (in the 20% tax bracket) would owe the following tax…
$15,000 x 0.10 = $1,500
($25,000 - $15,001) x 0.15 = $1,500
($30,000 - $25,001) x 0.20 = $1,000
Total Tax = $1,500 + $1,500 + $1,000 = $4,000
In this example, the $4,000 income tax is roughly 13% of the taxpayer's $30,000 taxable income.
In addition, the tax rates that apply to an individual's taxable income also depend on the individual's filing status. According to the IRS, there are four basic filing status categories for an individual taxpayer:
- Single
- Married filing jointly or Qualifying widow(er)
- Married filing separately, and
- Head of household
Federal Income Tax Rates for the 2007 Tax Year
For the 2007 tax year, there are six tax brackets (10% to 35%) and four separate filing classifications for the following taxable income levels...
In summary, the above information provides the general concepts of how income tax rates are applied. As a reminder, a great benefit of being a residential landlord is the substantial
income tax deductions
that exist for rental property owners. These deductions can substantially lower your taxable income, tax rate and income tax bill.
Please note: The above information is general in nature and should not be considered tax or accounting advice. It should not be relied upon for your own particular circumstances. For tax advice, please consult the services of a qualified accountant or tax attorney.
For more in-depth information on income taxes for individual taxpayers, please visit
The Landlord's Library
book collection. It's a terrific "one-stop" resource for helping you pave the path to your landlording success.
Return from Income Tax Rates to Federal Income Tax Filing
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