2018 Tax Brackets and Rates

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Prepared by Lesley McDaniel, CPA– Manager

Tax reform has brought about a number of changes.  One of those being tax brackets and tax rates. For individuals, there are still seven tax rates in place, however those rates, overall, have decreased.Hancock Askew & Co., LLP

We have included both the 2017 and 2018 tax brackets below for comparison purposes for both single filers and married filing joint filers.

2018 Tax Brackets:

Rate Individuals (Single) Married Filing Jointly
10% Up to $9,525 Up to $19,050
12% $9,526 to $38,700 $19,051 to $77,400
22% $38,701 to $82,500 $77,401 to $165,000
24% $82,501 to $157,500 $165,001 to $315,000
32% $157,501 to $200,000 $315,001 to $400,000
35% $200,001 to $500,000 $400,001 to $600,000
37% Over $500,000 Over $600,000

2017 Tax Brackets:

Rate Individuals (Single) Married Filing Jointly
10% Up to $9,325 Up to $18,650
15% $9,326 to $37,950 $18,651 to $75,900
25% $37,951 to $91,900 $75,901 to $153,100
28% $91,901 to $191,650 $153,101 to $233,350
33% $191,651 to $416,700 $233,351 to $416,700
35% $416,701 to $418,400 $416,701 to $470,700
39.6% Over $418,400 Over $470,700

As you can see, for 2018, the highest tax rate will fall from 39.6% to 37%.  While the lowest tax rate remains at 10%, most income levels have increased to allow taxpayers to have a higher income, while paying at the same or a lower rate.

Capital gains are another type of tax structure that will stay in place with the tax reform.  Short term capital gains will continue to be taxed at ordinary income rates, which will follow the 2018 tax brackets above.  While the rates did not change for long term capital gains, the way they are applied changed somewhat.  Capital gain rates are still 0%, 15%, or 20%.  The rate previously was determined based on your tax bracket.  In 2017, the two lowest tax brackets applied a 0% capital gains rate.  The next four tax brackets applied the 15% capital gains rate, while only the top bracket applied the 20% capital gains rate.  Tax reform has done away with this structure, while the long term capital gains rates are now based on income level.

See the following rates for 2018:

Long Term Capital Gains Rate Individuals (Single) Married Filing Joint
0% Up to $38,600 Up to $77,200
15% $38,601 to $425,800 $77,200 to $479,000
20% Over $425,800 Over $479,000

 

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