What Is the Federal Tax Rate?

Federal tax rates are fundamental information for both individuals and establishments for estimating tax liabilities and planning financials. The U.S. obtains a progressive tax system. Therefore, the tax rates increase as the income amount rises.

Federal Income Tax Brackets

The IRS divides federal income tax into different brackets with assigned rates. The federal income tax brackets in 2024 for single filers and married couples filing jointly are listed below:

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Additional Federal Taxes

Individual taxpayers and establishments must consider additional federal taxes alongside the federal income tax as listed below:

• FICA Taxes (Social Security & Medicare): Employees make contributions of 6.2% for Social Security and 1.45% for Medicare with employers matching these amounts.
• Self-Employment Tax: Self-employed individuals pay 15.3%. It covers both employee and employer portions of FICA.
• Capital Gains Tax: Long-term investments that are held over a year are taxed at 0%, 15% or 20% in accordance with the amount of the income.

Standard Deductions and Credits

Taxable income is lowered via the standard deduction or itemized deductions. The standard deduction for 2024 is $14,600 for single filers and $29,200 for married couples filing jointly.

Tax credits like the Child Tax Credit and Earned Income Tax Credit (EITC) might further reduce the tax liability.

Federal Tax Rates Affect The Paycheck

Businesses withhold federal income tax from wages based on W-4 form information. The amount of income, filing status as well as deductions have impact on the withholding amount. If too little is withheld, a tax bill may be due when filing. If too much is withheld, a refund is issued.

If you need aid in optimizing withholdings or financial planning for tax payments, Watter CPA is here to present professional assistance.