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What are the IRS Tax Brackets?

Irs Tax Brackets

In the United States, the federal income tax brackets represent the core characteristic of the progressive system. The IRS tax brackets are instituted to all taxpayers of the Untied States. These brackets enable an individual to calculate their expected tax return. In addition, the system is based on the individuals annual income.

The federal income tax brackets are a proportional taxing system; those individuals who make more money will be taxed at higher rates, while those earning less will be taxed at lower percentage rates. The rates are adjusted each year to account for inflation and changes in wages. In addition, the dollar amounts of the Federal income standard deduction and personal exemption are adjusted annually to account for changes in purchasing power.

For the most recent tax year, the standard deduction was $5,700 for single individuals, $8,350 for heads of household, and $11,400 for married couples filing a joint return. The majority of taxpayers opt to take the standard deduction rather than spending time to itemize deductions such as charitable contributions or interest payments on equity loans and mortgage payments.

The calculations associated with the IRS tax brackets are highly complex, however, they use a standard formula that takes into account an assortment of income-based characteristics. The primary aspect of the Federal income tax brackets is that it is a progressive system that taxes higher earners at higher rates.

NEXT: Knowing the Tax Income Brakcets

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