2017 Federal Income Tax Rates

As the close of the year draws near, taxpayers grow concerned about limiting their tax liability in 2017. By understanding their incremental federal income tax rates, individuals can appreciate the benefit received from a potential deduction.

2017 Income Tax Rate Schedules

Income tax rate tables, or brackets, are published each year by the federal government through the Internal Revenue Service or IRS. These tables outline the tax owed and incremental tax rates.  These schedules can also be used to estimate a potential income tax liability in 2017.  However, more accurate estimates can be achieved by completing Form 1040.

Information on the 2016 schedules can be found in our article:  Tax Brackets, while our Tax Rate Calculator can be used to estimate federal income taxes owed for the years 2013 through 2017.

Reading a Tax Rate Schedule

The American Taxpayer Relief Act of 2012 added a seventh bracket (39.6%) in 2013.  The remaining six rates were unchanged.  Reading a tax rate schedule is a fairly simple process.

The first step is to calculate an individual's total federal taxable income.  Again, IRS Form 1040 can help individuals determine that value more accurately.  Once the taxable income is known, the next step involves selecting the proper rate table.

There are four schedules, depending on the individual's filing status such as Single or Married, Filing Jointly.  The instructions for Form 1040 explain the process for selecting the correct status.  The tables that follow provide the 2017 income tax brackets.

2017 Unmarried Individuals: Rate Schedule X

Taxable income is over - But not over - The tax is: Of the amount over -
$0 $9,325 $0 + 10% $0
9,325 37,950 932.50 + 15% 9,325
37,950 91,900 5,226.25 + 25% 37,950
91,900 191,650 18,713.75 + 28% 91,900
191,650 416,700 46,643.75 + 33% 191,650
416,700 418,400 120,910.25 + 35% 416,700
418,400 - 121,505.25 + 39.6% 415,050

2017 Married Individuals Filing Joint Returns or Surviving Spouses: Rate Schedule Y-1

Taxable income is over - But not over - The tax is: Of the amount over -
$0 $18,650 $0 + 10% $0
18,650 75,900 1,865.00 + 15% 18,650
75,900 153,100 10,452.50 + 25% 75,900
153,100 233,350 29,752.50 + 28% 153,100
233,350 416,700 52,222.50 + 33% 233,350
416,700 470,700 112,728.00 + 35% 416,700
470,700  - 131,628.00 + 39.6% 470,700

2017 Married Filing Separately: Rate Schedule Y-2

Taxable income is over - But not over - The tax is: Of the amount over -
$0 $9,325 $0 + 10% $0
9,325 37,950 932.50 + 15% 9,325
37,950 76,550 5,226.25 + 25% 37,950
76,550 116,675 14,876.25 + 28% 76,550
116,675 208,350 26,111.25 + 33% 116,675
208,350 235,350 56,364.00 + 35% 208,350
235,350  - 65,814.00 + 39.6% 235,350

2017 Head of Household: Rate Schedule Z

Taxable income is over - But not over - The tax is: Of the amount over -
$0 $13,350 $0 + 10% $0
13,350 50,800 1,335.00 + 15% 13,350
50,800 131,200 6,952.50 + 25% 50,800
131,200 212,500 27,052.50 + 28% 131,200
212,500 416,700 49,816.50 + 33% 212,500
416,700 444,550 117,202.50 + 35% 416,700
444,550 - 126,950.00 + 39.6% 444,550

Tax Rate Example Calculation

We're going to run through a quick example to illustrate how the above tables are used to determine a taxpayer's incremental tax bracket in 2017.  In this example, let's say that Bill's filing status is Married Filing Jointly.  That means he will be using Schedule Y-1 above.  If Bill's federally taxable income in 2017 is $100,000, then the tax owed is calculated as follows:

Bill is going to use the third row of the Y-1 schedule because his income falls between $75,900 and $153,100.  That puts Bill in the 25% tax bracket.  Calculating the tax liability from that table:

  • $10,452.50 + 25% x ($100,000 - $75,900)
  • $10,452.50 + 0.25 x $24,100
  • $10,452.50 + $6,025.00 = $16,477.50

Marginal Tax Rates

Anyone that understands how to use these tables also understands why they are referred to as marginal tax rates.  Within each rate schedule it's possible to find the taxpayer's incremental tax rate, or marginal rate of tax.  This is the rate at which each incremental dollar earned is taxed.  In the above example, the marginal tax rate was 25%.
 
One of the more common misconceptions is that if someone earns more money, then all of the income is taxed at the higher rate.  The above tables demonstrate this is simply not true.  Individuals are taxed at an incremental rate on marginal income.  That means an individual might be taking home less pay for each additional hour worked, but they are certainly bringing home more money.


About the Author - 2017 Federal Income Tax Rates (Last Reviewed on January 20, 2017)