Tax Rates Overview

In the United States, more than 137 million federal individual income tax returns are filed every year. Each return represents the different tax obligations of single people, married couples, and families--each with their own earnings, deductions, credits, and tax rates. This overview provides an introduction to the federal tax system, including filing status, tax brackets, tax rates and the IRS tax table 2013.

Filing Status

In order to determine a person's tax rate, the filing status must first be known. The four statuses used in the U.S. are single, married filing jointly, married filing separately, and head of household. Each of these statuses uses different income limitations. For example, the introductory 10% bracket applies to the first $8,925 for a person filing single, while the same bracket applies to the first $12,750 for someone filing as head of household.

Tax Brackets

The United States operates on a graduated income tax system, which means that only income falling within a particular bracket is charged that tax rate. For instance, a single person earning $10,000 is taxed 10% on the first $8,925 and 15% on the next $1,075. As of 2013, U.S. taxes fall into seven brackets: 10%, 15%, 25%, 28%, 33%, 35% and 39.6%. As income increases, a person's marginal tax rate also increases.

IRS Tax Table 2013

The following table is the federal income tax table 2013 from the IRS:

Tax Rate Single Married Filing Joint Married Filing Separate Head of Household
10% Up to $8,925 Up to $17,850 Up to $8,925 Up to $12,750
15% $8,926 – $36,250 $17,851 – $72,500 $8,926 – $36,250 $12,751 – $48,600
25% $36,251 – $87,850 $72,501 – $146,400 $36,251 – $73,200 $48,601 – $125,450
28% $87,851 – $183,250 $146,401 – $223,050 $73,201 – $111,525 $125,451 – $203,150
33% $183,251 – $398,350 $223,051 – $398,350 $111,526 – $199,175 $203,151 – $398,350
35% $398,351 – $400,000 $398,351 – $450,000 $199,176 – $225,000 $398,351 – $425,000
39.6% Over $400,000 Over $450,000 Over $225,000 Over $425,000

Marginal Tax Rate Versus Average Tax Rate

Individuals can use two different rates to compare their tax burdens: the marginal tax rate and the average tax rate. The marginal tax rate is the highest tax bracket into which earnings fall. In the example above, the marginal tax rate is 15%.

The average tax rate is the actual amount of taxes paid as compared to income earned.

Two people can pay the same marginal tax rate, also known as being in the same tax bracket, but their different incomes result in different average tax rates. Someone making $10,000 per year and someone else making $20,000 per year both fall into the 15% marginal tax rate, but the $10,000 earner pays a 10.75% average tax rate while the $20,000 earner pays a 12.88% rate. Average tax rates increase as federal, state, and local income taxes are combined.

Tax Oversight

Tax rates and tax collection measures are set forth by the Internal Revenue Code, which is enacted by Congress and administered by the International Revenue Service, IRS. These tax laws can change from year to year based on Congressional approval. The information and examples listed above apply only to individual taxpayers at the national level; corporations, investors, and state taxpayers must comply with other tax regulations.

For more information, please see the following article on the 2013 tax tables.