Are you willing to pay more to cover Airbnb taxes?
Payroll tax unnoticed by workers, but welcomed by Treasury

2014 tax planning starts with your tax bracket

The 2013 tax year is finally over. That means it's time to turn your tax thoughts to moves you can make to reduce your 2014 tax bill.

A good starting point for any tax planning is with the basics, such as knowing what your tax bill likely will be.


While there are a lot of variables that come into play, you can get a general idea by checking out the annual tax brackets.

We're still waiting for Congress to finalize many 2014 tax laws, but the seven ordinary income tax rates are the same, starting at 10 percent and topping out at 39.6 percent.

And the Internal Revenue Service's inflation adjustments last fall told us what income ranges will be taxed at those various rates.

So you don't have to go searching, here they are in the table below.

Tax Rate Single  Head of Household Married Filing Jointly
or Surviving Spouse
Married Filing Separately
10%  Up to $9,075   Up to $12,950   Up to $18,150   Up to $9,075
15%  $9,076
 to $36,900
  to $49,400
to $73,800
to $36,900
25%  $36,901
 to $89,350
  to $127,550
to $148,850
to $74,425
28%  $89,351
 to $186,350
  to $206,600
to $226,850
to $113,425
33%  $186,351
 to $405,100
  to $405,100
to $405,100
to $202,550
35%  $405,101
 to $406,750
  to $432,200
to $457,600
to $228,800
39.6%  $406,751 or more   $432,201 or more   $457,601 or more   $228,801 or more

Print this out or simply bookmark this page. It will come in handy as you start focusing more intently on your 2014 taxes.

Progressive taxes: Remember, even if your annual salary falls in the 39.6 percent bracket, you don't pay that rate on every dollar you earn.

The U.S. tax system is progressive. That means you pay the top rate, or whatever bracket your income tops out at, on the last dollar you earn. The rest of your money is taxed at the lesser rates leading up to your top tax bracket.

So every taxpayer pays 10 percent on the first $9,075 of taxable income that he or she receives. That's $907.50. Then we pay the 15 percent rate on our earnings that fall into that tax bracket and so on, until all our money is taxed at the proper rate.

These tax calculations mean that while your income may be in the 39.6 bracket, your effective tax rate will be less.

More money, more taxes: Of course, wealthier taxpayers also have to worry about some added taxes.

There's the 3.8 percent Net Investment Income Tax, or NIIT, as well as the additional 0.9 percent Medicare payroll tax on top of the 1.45 all of us already have withheld from our paychecks.

These added taxes on the rich kick in if you make more than $200,000 as a single filer or $250,000 as a married couple filing jointly.

All these considerations are why it's better to start thinking about your 2014 taxes now, instead of next April. There's still plenty of time to take the approviate tax actions that could lower the amount you'll owe Uncle Sam this year.

You also might find these items of interest:


Feed You can follow this conversation by subscribing to the comment feed for this post.


Great post, very informative.


Knowing the brackets is good but to use them to estimate your 2014 taxes, you also need to know the 2014 personal exemption amount, which increased to $3,950, and the 2014 standard deductions (if you are not itemizing, like me). In 2014, the standard deduction for married couples filing a jointly is $12,400, on for single individuals or married couples filing separate returns is $6,200, and for heads of household is $9,100.

The comments to this entry are closed.