Tax Season Federal and State Tax Tools 2019 - 2020

Federal Income Tax Rates 2019 - 2020

Tax filing carries some uncertainty that attaches to our annual budgets since typically this time of year draws more cash out of our earnings to catch up on income tax payments.

TurboTax and H&R Block Tax Calculators

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Uncle Sam loves to dig his paws into our pockets, and the federal income tax rates happen to be the tool he uses to remove some of that cash from our wallets.

How Federal Income Tax Rates Influence Our Annual Tax Payments To The IRS

Tax brackets, tax rates, and the amount of annual income we make all work together to determine how much taxes we pay to the IRS each year.

Typically, our income falls into several tax brackets, and each portion of income within a tax bracket is taxed at the corresponding rate. Then all potions of income from each tax bracket are added together to determine tax liability

Income Tax Rates and Brackets Calculator

Taxes are a burden, but a necessity. They fund the operation of our country, and the greed of our politicians.

How Tax Deductions Lower Income Tax Rates

I'm not one to complain about taxes, ok that's a lie, but I do realize the importance of them. However, I certainly do find myself disappointed in the way our government spends my hard earned tax dollars.

Nevertheless, I pay them like everyone else does as required by Uncle Sam. Fact is, good financial practices can help lower the amount of taxes we all pay.

Tax deduction work against income tax rates by lowering our taxable income.

This in turn can reduce the number of tax brackets we fall into, which means lower tax bills.

Simply put, the fewer tax bracket we fall within, the lower the tax rates are that we pay.

So by lowering net taxable income with tax deductions, we can lower our overall tax liability to the Internal Revenue Service and keep more of our hard earned dollars.

Taxes Bad! Tax Deductions Good!!!

What States Have An Income Tax Rate System

Across the nation 41 states have a individual state income tax system to collect operating costs. Only seven states don't impose an income tax. They are:

  • Alaska
  • Florida
  • Nevada
  • South Dakota
  • Texas
  • Washington
  • Wyoming

Two states charge a specific income tax on dividend and interest income for individuals that earned income tied to their state. These states include:

  • Tennessee
  • New Hampshire

Over the decades, federal tax rates have run the gambit with tax rates that have been astronomically above what we see today for the higher income earners. Today's federal income tax rates represent a much closer range throughout all tax brackets than from the past.

Federal Income Tax Rate History

Historical tax rates for the United States federal government put higher income earners in a much more constrictive position with tax rates as high as 91% back in the 1950's.

Now days, those tax rate gaps between the lowest and highest income earners are much more narrow than they use to be.

U.S. Income Tax Rates are associated to out federal tax brackets based on the tax filing status you choose.

Our federal IRS income tax calculator used these factors to calculate your overall federal tax bill. By claiming tax deductions, every tax filer has the opportunity to possibly lower their taxable income, and therefore lower their tax brackets and tax rates in order to possible pay less taxes on their remaining taxable income.

Federal Tax Rate History Chart

93 - 2000 2001 2002 03 - 2012 13 - Now
    10% 10% 10%
15% 15% 15% 15% 15%
28% 27.5% 27% 25% 25%
31% 30.5% 30% 28% 28%
36% 35.5% 35% 33% 33%
39.6% 39.1% 38.6% 35% 35%
        39.6%

Tax Deductions Lower Overall Taxable Income

Tax deductions come from many facets of our tax code.

Home mortgage, Medical expenses, Education expenses, Dependants, Job expenses, and much more.

Deductions can push your taxable income down into lower tax bracket rates.

The tax rates describe the ratio or percentage at which taxpayers are taxed based on federal tax filing status. And each of the tax brackets increase your tax rate as your income grows and pushes you up into these higher tax brackets and associated higher tax rates.

Several formats can be used to determine your tax rate based on your preference for how you like to analyze your tax rate.

These Federal Tax Rate Formats Include:

Statutory Tax Rate: This is the actual multiple level statutory rates related to your tax brackets and overall taxable income.

Average Tax Rate: This refers to the ratio of total taxes paid - to your total taxable income, expressed as a percentage of your income.

Marginal Tax Rate: This refers to the tax rate a taxpayer pays on the last dollar earned in their annual income. This is the highest rate paid from the highest tax bracket your income falls within. The highest marginal tax rate for 2015 is 39.6%.

Effective Tax Rate: An effective tax rate calculation is generally used to measure the total amount of taxes paid as a flat percentage of the individuals or company's gross income, as apposed to a percentage of the taxable income in the same circumstances.