Tax Brackets by Income for 2020

Published On:

By Jaylin

In 2019, the US government collected revenues of $3.5 trillion. About half of this was from individual income tax.

If you’re wondering how much tax you will owe from 2020, then you need to know which tax bracket you fall into.

This will be determined by how much you earn.

Read on as we take a look at the tax brackets by income for 2020.

Single

The lowest rate of tax is 10%. This is what all single people will pay on the first $9,875 of their earnings.

The highest rate is 37%. You would only pay this rate on any earnings above $518,400 which means that for the vast majority of us, we’ll never have to pay this rate.

The breakdown of the tax brackets in between is as follows:

  • 10%: Up to $9,875
  • 12%: From $9,876 to $40,125
  • 22%: From $40,126 to $85,525
  • 24%: From $85,526 to $163,300
  • 32%: From $163,301 to $207,350
  • 35%: From $207,351 to $518,400
  • 37%: More than $518,400

These are the 2020 rates that you would use to submit your filing in 2021.

Married Couples Filing Jointly

If you’re a married couple filing jointly, the tax brackets remain the same, but the thresholds for each bracket are different. These thresholds are based on your combined income rather than individual.

The tax brackets for married couples filing jointly are as follows:

  • 10%: Up to $19,750
  • 12%: From $19,751 to $80,250
  • 22%: From $80,251 to $171,050
  • 24%: From $171,051 to $326,600
  • 32%: From $326,601 to $414,700
  • 35%: From $414,701 to $622,050
  • 37%: More than $622,050

Filing jointly is usually best if only one of the married couple has a significant income. Otherwise, it may make sense to file separately, but you can always calculate using both methods to see which works out best.

How to Calculate the Tax You Owe

These are the thresholds, but how do you actually use them?

Let’s look at an example. Say you earn exactly $90,000 and are filing a single person. Your tax bracket would 24%, but that doesn’t mean you would pay 24% on all of your earnings.

You would pay 10% on the first $9,875, which is $987.50. You would pay 12% on everything from $9, 876 to $40,125. This means you are paying 12% on the next $30,250 of your earnings, which works out at $3,630.

Your earnings from $40,126 to $85,525 would be taxed at 22%. 22% of $45,400 is $9,988. Finally, you would pay 24% on everything from $85,525 to $90,000. 24% of $4,475 is $1,074.

In total you would owe $987.50 + $3,630 + $9,988 + $1,074 which comes to $15,679.50

If this sounds too complicated to work out, then don’t worry. The good news is that there are plenty of resources online that can help. If math was never your strong point, you can use a salary and tax calculator to do all the hard work for you. Just put in your income and the calculator will do the rest for you.

Now You Know the Tax Brackets by Income

Now that you know what the tax brackets by income are, you should be able to calculate exactly how much tax you’re going to have to pay.

Paying taxes may not be much fun, but it’s important to remember that your taxes get put to good use for things benefit all of us, such as defense, social security, health programs, and more.

For more great content, be sure to check out the rest of the site.

 

About Jaylin

I'm a professional blogger, marketer, and entrepreneur. I'm Passionate for writing and focusing on the informative article about Fashion, Health, Beauty, Travel and many more.

Leave a Comment