Federal Income Taxes
Americans have been paying tax under a Federal income tax system since 1913, when the 16th Amendment was added to our constitution. Every year since then, new rules, tax rates, and deductions have challenged Americans' ability to pay the lowest possible amount of tax.
What makes it even tougher is that normal life changes also affect your taxes. If in the last year you got married or divorced, adopted or had a child, paid off a mortgage, opened a home business, or simply got a raise—the number of exemptions claimed, your filing status, and deductions you are allowed to take may also change.
Your filing status determines the tax rate schedule you use, and your annual income determines your tax rate. It can be helpful to think of tax rates as layers: Zero tax is paid on the bottom layer, 10% on the next layer, and so forth. The highest layer (or rate) your income reaches is known as your marginal rate.
Tax Rate Reduction
Under current law, marginal rates will be the same through 2016: 10%, 15%, 25%, 28%, 33%, 35%, and 39.6%.
To determine your tax level, click on the appropriate filing status below: