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Learning, Sharing, and Teaching => Taxes => Topic started by: Roadrunner53 on April 04, 2018, 08:07:33 AM

Title: New Tax Brackets
Post by: Roadrunner53 on April 04, 2018, 08:07:33 AM

Can someone tell me how the new tax brackets will work?

The 12% bracket includes income of $19,051 to $77,400
The 22% bracket includes income of $77,401 to $165,000

Let us say my income is $80,000. Will I be taxed 12% for the amount of $77,400 and then 22% for the remaining $2,600?
OR
Will I be taxed for the whole $80,000 at 22%?

Thanks!

Title: Re: New Tax Brackets
Post by: sokoloff on April 04, 2018, 08:10:49 AM

Closer to the former.

https://www.fool.com/taxes/2017/12/13/your-guide-to-tax-brackets-in-2018.aspx

The "bracket" is the tax rate on the dollars in that bracket.
So, you'll pay 10% on the dollars in the 10% bracket, 12% on the dollars in the 12% bracket, 22% on the dollars in the 22% bracket, etc.

Title: Re: New Tax Brackets
Post by: Roadrunner53 on April 04, 2018, 08:26:30 AM

Oh, I didn't realize it worked that way! Thank you for the link!

Title: Re: New Tax Brackets
Post by: terran on April 04, 2018, 08:29:33 AM

Quote from: Roadrunner53 on April 04, 2018, 08:07:33 AM

Let us say my income is $80,000. Will I be taxed 12% for the amount of $77,400 and then 22% for the remaining $2,600?

This one. Just like the old brackets.

And that assumes $80k is your taxable income. Don't forget to deduct for traditional IRA contributions and the standard deduction if $80k is what your W2 shows.