Certified Public Accountants | Business Advisors

New Income Tax Rates & Brackets, Revised Child Tax Credit

New Income Tax Rates & Brackets


Under pre-Act law, individuals were subject to six tax rates: 10%, 15%, 25%, 28%, 33%, 35%, and 39.6%. Under new law, for tax years beginning after Dec. 31, 2017 and before Jan. 1, 2026, seven tax rates apply for individuals: 10%, 12%, 22%, 24%, 32%, 35%, and 37%. The specific application of these rates, and the income brackets at which they apply, is shown below.

FOR MARRIED INDIVIDUALS FILING JOINT RETURNS AND SURVIVING SPOUSES:

If taxable income is: The tax is:
Not over $19,050 10% of taxable income
Over $19,050 but not over $77,400 $1,905 plus 12% of the excess over $19,050
Over $77,400 but not over $165,000 $8,907 plus 22% of the excess over $77,400
Over $165,000 but not over $315,000 $28,179 plus 24% of the excess over $165,000
Over $315,000 but not over $400,000 $64,179 plus 32% of the excess over $315,000
Over $400,000 but not over $600,000 $91,379 plus 35% of the excess over $400,000
Over $600,000 $161,379 plus 37% of the excess over $600,000

 

FOR SINGLE INDIVIDUALS (OTHER THAN HEADS OF HOUSEHOLDS AND SURVIVING SPOUSES):

If the taxable income is: If the taxable income is:
Not over $9,525 10% of taxable income
Over $9,525 but not over $38,700 $952.50 plus 12% of the excess over $9,525
Over $38,700 but not over $82,500 $4,453.50 plus 22% of the excess over $38,700
Over $82,500 but not over $157,500 $14,089.50 plus 24% of the excess over $82,500
Over $157,500 but not over $200,000 $32,089.50 plus 32% of the excess over $157,000
Over $200,000 but not over $500,000 $45,689.50 plus 35% of the excess over $200,000
Over $500,000 $150,689.50 plus 37% of the excess over $500,000

 

FOR HEADS OF HOUSEHOLDS:

If taxable income is: The tax is:
Not over $13,600 10% of taxable income
Over $13,600 but not over $51,800 $1,360 plus 12% of the excess over $13,600
Over $51,800 but not over $82,500 $5,944 plus 22% of the excess over $51,800
Over $82,500 but not over $157,500 $12,698 plus 24% of the excess over $82,500
Over $157,500 but not over $200,000 $30,698 plus 32% of the excess over $157,500
Over $200,000 but not over $500,000 $44,298 plus 35% of the excess over $200,000
Over $500,000 $149,298 plus 37% of the excess over $500,000

  
  
FOR MARRIEDS FILING SEPARATELY:

If taxable income is: The tax is:
Not over $9,525 10% of taxable income
Over $9,525 but not over $38,700 $952.50 plus 12% of the excess over $9,525
Over $38,700 but not over $82,500 $4,453.50 plus 22% of the excess over $38,700
Over $82,500 but not over $157,500 $14,089.50 plus 24% of the excess over $82,500
Over $157,500 but not over $200,000 $32,089.50 plus 32% of the excess over $157,500
Over $200,000 but not over $300,000 $45,689.50 plus 35% of the excess over $200,000
Over $300,000 $80,689.50 plus 37% of the excess over $300,000

 
 
CAPITAL GAIN RATES

In case you were wondering, the rates of 0%, 15%, or 20% were not changed but the thresholds of when to apply were adjusted.

2017:

• 0% tax rate applied to adjusted net capital gain up to $37,950 ($75,900 for joint filers)

• 15% tax rate applied to adjusted net capital gain over the amount subject to the 0% rate and up to $418,400 ($470,700 for joint filers) and

• 20% tax rate applied to adjusted net capital gain over $418,400 ($470,700 for joint filers)

2018:

• 0% tax rate applies to adjusted net capital gain up to $38,600 ($77,200 for joint filers)

• 15% tax rate applies to adjusted net capital gain over the amount subject to the 0% rate, and up to $425,800 ($479,000 for joint filers) and

• 20% tax rate applies to adjusted net capital gain over $425,000 ($479,000 for joint filers)

CHILD TAX CREDIT INCREASED
Under pre-Act law, a taxpayer could claim a child tax credit of up to $1,000 per qualifying child under the age of 17. The aggregate amount of the credit that could be claimed started to phase out at AGI over $75,000 ($110,000 for joint filers). A taxpayer claiming the credit had to include a valid Taxpayer Identification Number (TIN) or a Social Security Number (SSN) for each qualifying child on their return.

For tax years beginning after Dec. 31, 2017 and before Jan. 1, 2026, the new law increases the credit for qualifying children to $2,000 from $1,000, and increases the refundable portion of the credit to $1,400. It also introduces a new (nonrefundable) $500 credit for a taxpayer's dependents who are not qualifying children. The adjusted gross income level at which the credits begin to be phased out has been increased to $200,000 ($400,000 for joint filer). No credit will be allowed unless the taxpayer provides the child’s SSN.

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