A. Please refer to the table at the end of this mini blog series for a summary of the various tax rates for 2017.
Income and Income Taxes
For many taxpayers, their primary source of income is their wages. For others, it may be pension or social security income and/or retirement account withdrawals (RMDs or otherwise). Others may rely on savings account and bond interest. Most taxpayers can aggregate income from wages, pensions, social security and interest to determine their total income. Your total taxable income can be impacted by a number of factors, including, but not limited to: alimony payments, contributions to employer retirement plans and/or IRAs, contributions to HSAs, exemptions, dependents, deductions (standard or itemized) and credits. These adjustments to your income result in your adjusted gross income.
Although the top marginal income tax rate of 39.6% is assessed on taxpayers with taxable income of $418,401 and higher for single filers and $470,701 and higher for married couples filing jointly, the actual tax rate paid is the effective income tax rate. The effective income tax rate is the blended rate you actually pay. Based on the table above, a single filer earning $91,900 would have a top marginal income tax rate of 25% and an effective income tax rate of approximately 20%. The first $9,325 of income would be taxed at 10%, the next $28,625 (from $9,326 to $37,950) would be taxed at 15% and the last $53,950 (from $37,951 to $91,000) would be taxed at 25%.
Please read next blog post about 2017 capital gain tax rates.