2006 Tax Brackets:
For 2006, the six income tax rates for individual taxpayers are 10%, 15%, 25%, 28%, 33%, and 35%.
In addition to cutting tax rates, the Economic Growth and Tax Relief Reconciliation Act (EGTRRA) of 2001 created the 10% tax bracket for lower incomes.
For single taxpayers and married persons filing a separate return, the first $7,550 of income is taxed at this rate. For married persons filing a joint return, the first $15,100 is taxed at 10%. For persons filing as head of household, the first $10,750 is taxed at the 10% rate.
It helps to think of your tax rate in terms of a marginal tax rate. This is the tax rate on the last dollar of income that you earned. As your taxable income increases, you are taxed at a higher tax rate as a result of being bumped into a higher income tax bracket.
The following tables show the cutoff points in taxable income for 2006 that mark each income tax bracket:
Table A: Single tax return:
|
If taxable income is: |
Amount of tax that you owe is: | ||
|
More than: |
However, not over: |
This amount (or %) plus % of: |
Amount over: |
|
$0 |
$7,550 |
10% |
-- |
|
$7,550 |
$30,650 |
$755 + 15% |
$7,550 |
|
$30,650 |
$74,200 |
$4,220 + 25% |
$30,650 |
|
$74,200 |
$154,800 |
$15,108 + 28% |
$74,200 |
|
$154,800 |
$336,550 |
$37,676 + 33% |
$154,800 |
|
$36,550 |
-- |
$97,653 + 35% |
$336,550 |
Table B: Married Filing Jointly (MFJ) or Qualifying Widow(er):
|
If taxable income is: |
Amount of tax that you owe is: | ||
|
More than: |
However, not over: |
This amount (or %) plus % of: |
Amount over: |
|
$0 |
$15,100 |
10% |
-- |
|
$15,100 |
$61,300 |
$1,510 + 15% |
$15,100 |
|
$61,300 |
$123,700 |
$8,440 + 25% |
$61,300 |
|
$123,700 |
$188,450 |
$24,040 + 28% |
$123,700 |
|
$188,450 |
$336,550 |
$42,170 + 33% |
$188,450 |
|
$336,550 |
-- |
$91,043 + 35% |
$336,550 |
Table C: Head of Household tax return:
|
If taxable income is: |
Amount of tax that you owe is: | ||
|
More than: |
However, not over: |
This amount (or %) plus % of: |
Amount over: |
|
$0 |
$10,750 |
10% |
-- |
|
$10,750 |
$41,050 |
$1,075 + 15% |
$10,750 |
|
$41,050 |
$106,000 |
$5,620 + 25% |
$41,050 |
|
$106,000 |
$171,650 |
$21,858 + 28% |
$106,000 |
|
$171,650 |
$336,550 |
$40,220 + 33% |
$171,650 |
|
$336,550 |
-- |
$94,657 + 35% |
$336,550 |
Table D: Married Filing Separate (MFS) return:
|
If taxable income is: |
Amount of tax that you owe is: | ||
|
More than: |
However, not over: |
This amount (or %) plus % of: |
Amount over: |
|
$0 |
$7,550 |
10% |
-- |
|
$7,550 |
$30,650 |
$755 + 15% |
$7,550 |
|
$30,650 |
$61,850 |
$4,220 + 25% |
$30,650 |
|
$61,850 |
$94,225 |
$12,020 + 28% |
$61,850 |
|
$94,225 |
$168,275 |
$21,085 + 33% |
$94,225 |
|
$168,275 |
-- |
$45,522 + 35% |
$168,275 |
For example, say you file a single return and have taxable income of $40,000 in 2006. Using Table A, above, your tax liability would be $4,220 plus 25% of income above $30,650, or $9,350 in your case. That works out to be $2,338 for a total federal income tax liability of $6,558.
To prevent you from being bumped into the next-higher bracket as a result of a cost-of-living wage increase, the IRS adjusts upward the amount of income that can be earned for each tax bracket every year. This phenomenon of being bumped into the next-higher tax bracket is sometimes called "bracket creep."
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Disclaimer: |
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Bill's Tax Service provides the information on this website as a service to its clients and the public. Bill's Tax Service makes no warranties, express or implied, as to the accuracy of information presented on this site or any links, sites, sponsors, or affiliates. While the information on this page is updated regularly, it may not reflect the most current position on a specific issue and should not be relied on for that purpose. As always, official sources and publications should be consulted for the most current rules and regulations. | ||||||||||||
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