May 25, 2007, Newsletter Issue #66: Federal Income Tax Rates

Tip of the Week

Federal income tax rates depend upon your taxable income and filing status, in general. For instance, tax rates on dividend income differ from capital qualified gains tax rates.

Taxpayers will usually choose their income tax amount from the Tax Rate Schedule or the Tax Table. If your 2006 taxable income is over $100,000 you will use the Tax Rate Schedule. If your taxable income is under $100,000, you will use the Tax Table. Both of these documents are found in the back of the 1040 Instruction booklet, Publication 17.

The IRS has a variety of marginal tax rates that taxpayers are classified into. There is the 10%, 15%, 25%, 28%, 33%, and 35%. To explain the 10% bracket: for every additional dollar you earn (ordinary income) you will be taxed at 10%. It ends at $7,550. The 35% bracket applies if you have over $336,550 while filing jointly or as a qualifying widow(er).

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