2014 Federal Income Tax Brackets

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Federal Income Tax BracketsThe federal income tax brackets are a fickle thing. Between political meddling and inflation, something changes every year. Of course, that streak is alive and well going into 2014.

There are two things that can happen to the tax brackets every year: the tax rates may change and the tax brackets may be adjusted for inflation. When the tax rates change, you can blame Congress for fiddling with the tax laws (unless it’s in your favor). In addition, the federal tax brackets are indexed to inflation. The IRS looks at the CPI data (Consumer Price Index) over a twelve month period. If inflation is high enough, the IRS will make adjustments to the income brackets.

The good news is the tax rates will stay the same as last year. Also, the IRS recently announced that inflation adjustments will be made to the federal income tax brackets, along with many other tax credits and deductions.

Before we get to the tax tables, here’s one last reminder. Don’t be too concerned if your income rose this year and you find yourself in a higher bracket. Based on how the tax brackets work, your tax bill might go up but so will your after tax income. Plus, a little planning can help lower your taxable income when you file your taxes each year.

2014 Federal Income Tax Brackets

These tax tables are for the 2014 tax year, with taxes due in April 2015. Use the 2013 tax brackets below for tax returns due in April 2014.

Here are the IRS’ 2014 inflation adjusted tax brackets broken down by filing status:

Single Tax Brackets

Taxable Income Tax Rate The Tax Is:
$0 – $9,075 10% 10% of the amount over $0
$9,075 – $36,900 15% $908 plus 15% of the amount over $9,075
$36,900 – $89,350 25% $5,081 plus 25% of the amount over $36,900
$89,350 – $186,350 28% $18,194 plus 28% of the amount over $89,350
$186,350 – $405,100 33% $45,354 plus 33% of the amount over $186,350
$405,100 – $406,750 35% $117,541 plus 35% of the amount over $405,100
Over $406,750 39.6% $118,189 plus 39.6% of the amount over $406,750

Married, Filing Jointly Tax Brackets

Taxable Income Tax Rate The Tax Is:
$0 – $18,150 10%  10% of the amount over $0
$18,150 – $73,800 15%  $1,815 plus 15% of the amount over $18,150
$73,800 – $148,850 25%  $10,163 plus 25% of the amount over $73,800
$148,850 – $226,850 28%  $28,925 plus 28% of the amount over $148,850
$226,850 – $405,100 33%  $50,765 plus 33% of the amount over $226,850
$405,100 – $457,600 35%  $109,588 plus 35% of the amount over $405,100
Over $457,600 39.6%  $127,963 plus 39.6% of the amount over $457,600

Head of Household Tax Brackets

Taxable Income Tax Rate The Tax Is:
$0 – $12,950 10%  10% of the amount over $0
$12,950 – $49,400 15%  $1,295 plus 15% of the amount over $12,950
$49,400 – $127,550 25%  $6,763 plus 25% of the amount over $49,400
$127,550 – $206,600 28%  $26,300 plus 28% of the amount over $127,550
$206,600 – $405,100 33%  $48,434 plus 33% of the amount over $206,600
$405,100 – $432,200 35%  $113,939 plus 35% of the amount over $405,100
Over $432,200 39.6%  $123,424 plus 39.6% of the amount over $432,200

Married, Filing Separately Tax Brackets

Taxable Income Tax Rate The Tax Is:
$0 – $9,075 10%  10% of the amount over $0
$9,075 – $36,900 15%  $908 plus 15% of the amount over $9,075
$36,900 – $74,425 25%  $5,081 plus 25% of the amount over $36,900
$74,425 – $113,425 28%  $14,463 plus 28% of the amount over $74,425
$113,425 – $202,550 33%  $25,383 plus 33% of the amount over $113,425
$202,550 – $228,800 35%  $54,794 plus 35% of the amount over $202,550
Over $228,800 39.6%  $63,981 plus 39.6% of the amount over $228,800

2014 Standard Deduction

The 2014 standard deductions are based off the 2013 numbers and adjusted for inflation.

Filing Status Standard Deduction
Single  $6,200
Married, Filing Jointly  $12,400
Head of Household  $9,100
Married, Filing Separately  $6,200

2014 Dividend And Capital Gains Tax Rates

The dividend and capital gains tax is the same as last year. Both will top out at 20%. In the end, both tax rates will correspond to your marginal tax rate.

Tax Rate Long Term Capital Gains Tax Qualified Dividend Tax
10% 0% 0%
15% 0% 0%
25% 15% 15%
28% 15% 15%
33% 15% 15%
35% 15% 15%
39.6% 20% 20%

This does not include the 3.8% Medicare tax introduced at the beginning of 2013.

Other 2014 Tax Changes

There were several other tax changes made due to the inflation adjustment. Some of the more important changes are highlighted below.

Alternative Minimum Tax

Last year, the Alternative Minimum Tax (AMT) exemption was finally tied to the inflation index. Before this, Congress had to annually pass a law to change it. The 2014 AMT exemption for single filers is $52,800 and for those married, filing jointly it’s $82,100.

Estate Taxes

Estate taxes were also tied to the inflation index last year. For 2014, the estate tax exclusion will be $5,340,000. Any amount over that will be taxed at 40%. If your net worth is hovering near this amount, I recommend talking with an estate tax attorney. They can help you build a solid estate plan that makes sure most of your estate goes where you want it to go and not to the government.

Saver’s Credit

The retirement savings contribution credit or Saver’s Credit, is for lower-income workers who save for retirement through a 401k or IRA. It’s a $1,000 credit for single filers ($2,000 for married). To qualify, you must fall within the AGI limits for your filing status. Those limits were increased to $30,000 for single filers and married filing separately, $60,000 for married filing jointly, and $45,000 for head of household.

Student Loan Interest Deduction

The student loan interest deduction allows you to deduct up to $2,500 in paid interest every year. This deduction has a phase-out period based on your modified adjustable gross income. The phase-out will begin for single filers at $65,000 and for married filing jointly at $130,000. The phase-out will end for single filers at $80,000 and for married filing jointly at $160,000.

Do you file your taxes online? Find out why I use TurboTax and recommend H&R Block at Home online tax software.

Past Brackets

2013 Tax Brackets

These tax tables are for the 2013 tax year, with taxes due in April 2014.

Tax Rate Single Married, Filing Jointly Married, Filing Separately Head of Household
 10% $0 – $8,925 $0 – $17,850 $0 – $8,925 $0 – $12,750
 15% $8,925 – $36,250 $17,850 – $72,500 $8,925 – $36,250 $12,750 – $48,600
 25% $36,250 – $87,850 $72,500 – $146,400 $36,250 – $73,200 $48,600 – $125,450
 28% $87,850 – $183,250 $146,400 – $223,050 $73,200 – $111,525 $125,450 – $203,150
 33% $183,250 – $398,350 $223,050 – $398,350 $111,525 – $199,175 $203,150 – $398,350
 35% $398,350 – $400,000 $398,350 – $450,000 $199,175 – $225,000 $398,350 – $425,000
 39.6% Over $400,000 Over $450,000 Over $225,000 Over $425,000

2012 Tax Brackets

These tax tables are for the 2012 tax year, with taxes due in April 2013.

Tax Rate Single Married, Filing Jointly Married, Filing Separately Head of Household
10% $0 – $8,700 $0 – $17,400 $0 – $8,700 $0 – $12,400
15% $8,700 – $35,350 $17,400 – $70,700 $8,700 – $35,350 $12,400 – $47,350
25% $35,350 – $85,650 $70,700 – $142,700 $35,350 – $71,350 $47,350 –  $122,300
28% $85,650 – $178,650 $142,700 – 217,450 $71,350 – $108,725 $122,300 – $198,050
33% $178,650 – $388,350 $217,450 – $388,350 $108,725 – $194,175 $198,050 – $388,350
35% Over $388,350 Over $388,350 Over $194,175 Over $388,350
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