2017 Tax Brackets & Standard Deductions Announced

Today, the IRS released the 2017 tax brackets (a tabled breakdown of the IRS federal income tax rates) and standard deduction amounts, and there will be a number of inflation adjustments over the 2016 tax brackets and standard deductions. Granted, the changes are minimal, given a CPI increase of less than 1% this past year.

Since we’re still in 2016, the 2016 tax brackets are going to be of most interest to you when you do your upcoming taxes, so I have included those as well. Armed with the below information, it would be an excellent time to calculate what your modified adjusted gross income will likely be next year and modify your tax allowances on your W4 form. This will help prevent being penalized for underpayment of taxes or getting a refund (which is really a form of self penalization by letting the government borrow your money, interest-free).

I have a separate article on earned income tax credit tables.

2016 Tax Brackets (IRS Federal Income Tax Rates)

tax brackets

In the tables below, it is important to note that the highlighted rates represent the income tax rate owed for the portion of your taxable income that falls into that bracket. As an example, if you are single and your taxable income is $50,000, your tax tax rate on your first $9,275 of taxable income is 10%, while taxable income between $9,275 and $37,650 is taxed at 15%, income from $37,650 to $50,000 is taxed at 25%, and so on.

Many taxpayers incorrectly assume that if your total income peaks at the 35% tax bracket, for example, all of your income is taxed at that rate. That is not true. The United States federal income tax system is a “progressive” system and the result is your actual tax rate is less than the tax rate in the top bracket you are in. With that in mind, here are the 2016 tax brackets:

Tax RatesSingle Filer Tax BracketsMarried Filing Jointly Tax BracketsMarried Filing Separately Tax BracketsHead of Household Tax Brackets

2016 Standard Deductions & Dependent Exemptions

standard tax deductionsStandard deductions can lower your taxable income by allowing you to deduct from your taxable income, if you decide not to itemize taxes. Only one of the 2016 standard deductions (head of household) had increased due to inflation adjustments.

Aside from the standard deductions, there are income tax exemptions that can be claimed, whether you itemize your taxes or take the standard deduction. You can take one exemption for yourself unless you can be claimed as a dependent by another taxpayer. If another taxpayer is entitled to claim you as a dependent, you cannot take an exemption for yourself even if the other taxpayer doesn’t actually claim you as a dependent.

You can also claim an exemption for each dependent. Note that a spouse can never be claimed as a dependent.

Here are the 2016 standard deduction and exemption amounts:

Filing Status:Deduction Amount:
Married Filing Separately$6,300
Married Filing Jointly$12,600
Head of Household$9,300
For Dependents$1,050
Personal Exemption$4,050

2017 Tax Brackets (IRS Federal Income Tax Rates)

Here are the new 2017 tax brackets:

Tax RatesSingle Filer Tax BracketsMarried Filing Jointly Tax BracketsMarried Filing Separately Tax BracketsHead of Household Tax Brackets

2017 Standard Deductions & Exemptions

And the 2017 standard deduction and exemption amounts:

Filing Status:Deduction Amount:
Married Filing Separately$6,350
Married Filing Jointly$12,700
Head of Household$9,350
Dependent Exemption$1,050
Personal Exemption$4,050

For more information, check out the IRS website and my “how to do your taxes” guide.

Tax Rate Discussion:

  • Which tax bracket will you top out in for this year and what are you predicting for 2017?
  • Will you be itemizing or taking the standard deduction? Why?

One Response

Leave a Reply