January marks not only the start of a new year but also a new tax season. The IRS will begin accepting and processing 2019 tax returns on January 27th this year, and as usual, taxes are due by April 15, 2020.
If you’re starting to think about filing your taxes, you might be wondering how much you paid in taxes last year, and at what tax rate. The answer to that lies in tax brackets, which determine how much Uncle Sam takes out of your paycheck.
With all the recent changes to the tax code, however, what are the tax brackets for 2019? We’ve pulled together this list to make your tax season a little easier.
What are the tax brackets for 2019?
Federal income tax rates are decided by the level of income earned, with rates increasing in tiers or tax brackets. The tax bracket you fall into depends on both your filing status and your taxable income.
Here are the federal income tax brackets for 2019:
|Tax rate||Single||Married filing separately||Married filing jointly||Head of household|
|10%||$0 - $9,700||$0 - $9,700||$0 - $19,400||$0 - $13,850|
|12%||$9,700 - $39,475||$9,700 - $39,475||$19,400 - $78,950||$13,850 - $52,850|
|22%||$39,475 - $84,200||$39,475 -
|$78,950 - $168,400||$52,850 - $84,200|
|24%||$84,200 - $160,725||$84,200 - $160,725||$168,400 - $321,450||$84,200 - $160,720|
|32%||$160,725 - $204,100||$160,725 - $204,100||$321,450 - $408,200||$160,700 - $204,100|
|35%||$204,100 - $510,300||$204,100 - $510,300||$408,200 - $612,350||$204,100 -
|37%||Over $510,300||Over $510,300||Over $612,350||Over $510,300|
This table can help you figure out your tax bracket for 2019. But this doesn’t tell you the federal tax rate you’ll pay on all your income — which is a common misconception. In other words, you can’t multiply your income by your tax bracket’s tax rate to estimate what you owe.
Your 2019 tax bracket only tells you the highest tax rate you’re subject to, a rate that is applied only to the portion of your taxable income that falls into this bracket.
All other income below this top rate will be subject to a lower tax rate, as outlined in the table above. Every filer with a single or married filing separately status, for example, pays 10% of the first $9,700 of taxable income. Then they’d pay 12% on the next $29,775 of taxable earnings up to $39,475, and so on.
How to reduce your taxable income
If you know your filing status and annual wage, you might think you know your tax bracket. But take note: your total wages and other income for 2019 is not the same as your taxable income. In fact, you’re unlikely to be taxed on the full amount you earned in 2019.
Instead, you’ll pay taxes based on your adjusted gross income (AGI), or what you earned less tax deductions, credits, and adjustments. You owe federal income taxes on this adjusted income only, not your gross income.
As a taxpayer, part of preparing your 2019 tax return will be calculating your adjusted gross income. And properly adjusting and reducing your taxable income is one of the main ways that you can lower your 2019 tax bill.
A common adjustment is the standard deduction — here’s a look at the new standard deductions for 2019:
- $12,200 for single filers or married people filing separately
- $18,350 for heads of household
- $24,400 for married couples filing jointly
You might also opt to itemize tax deductions, which can be a way for some filers to claim adjustments beyond the standard deduction.
Additionally, you can claim some tax deductions and credits whether you’re taking a standard deduction or itemizing. The following are some common deductions and credits:
- Educator expense deduction: Teachers may deduct up to $250 for expenses related to their job, such as the purchase of classroom supplies.
- Tax-advantaged accounts: Contributions to tax-advantaged accounts such as health savings accounts or individual retirement accounts can reduce your adjusted gross income.
- Student loan interest deduction: You can reduce AGI by the amount of qualifying interest you paid in 2019, up to $2,500.
- Self-employment costs: If you work for your own business, you can deduct certain costs of this arrangement including health insurance and half of your self-employment taxes.
- Educational tax credits: You can write off qualifying school or college tuition and other educational expenses through educational tax credits or deductions, such as the American opportunity tax credit.
Get ready for the 2020 tax season
Preparing for this tax season now will help you avoid needless tax filing mistakes and stress. You’ll have more time to complete tasks related to filing taxes. Plus, you’ll be able to file a return earlier and receive your tax refund earlier. Or, if you wind up owing taxes, you’ll know how much you must pay in taxes and have time to do so by the filing deadline.
So review your 2019 tax bracket now and get familiar with tax deductions and credits to get ready to file your tax return.