2005 Tax Rates
Below are the tax rates on ordinary income. Tax rates progressively increase as income increases. The tax rates apply only to the income in each tax bracket range. Tax rates apply only to taxable income. Non-taxable income encompasses tax-free interest on municipal bonds, above-the-line adjustments, itemized deductions or the standard deduction, and personal exemptions. Taxable income is almost always less than your total income.Capital gains are taxed at different tax rates. Capital gains tax rates are lower than ordinary income tax rates, and are calculated separately.
Note: These tax rate schedules are provided for tax planning purposes. To compute your actual income tax, please see the 2005 instructions for Form 1040, 1040A, or 1040EZ as appropriate.
Single Filing Status
(Tax Rate Schedule X)- 10% on income between $0 and $7,300
- 15% on the income between $7,300 and $29,700; plus $730.00
- 25% on the income between $29,700 and $71,950; plus $4,090.00
- 28% on the income between $71,950 and $150,150; plus $14,652.50
- 33% on the income between $150,150 and $326,450; plus $36,548.50
- 35% on the income over $326,450; plus $94,727.50
Married Filing Jointly or Qualifying Widow(er) Filing Status
(Tax Rate Schedule Y-1)- 10% on the income between $0 and $14,600
- 15% on the income between $14,600 and $59,400; plus $1,460.00
- 25% on the income between $59,400 and $119,950; plus $8,180.00
- 28% on the income between $119,950 and $182,800; plus $23,317.50
- 33% on the income between $182,800 and $326,450; plus $40,915.50
- 35% on the income over $326,450; plus $88,320.00
Married Filing Separately Filing Status
(Tax Rate Schedule Y-2)- 10% on the income between $0 and $7,300
- 15% on the income between $7,300 and $29,700; plus $730.00
- 25% on the income between $29,700 and $59,975; plus $4,090.00
- 28% on the income between $59,975 and $91,400; plus $11,658.75
- 33% on the income between $91,400 and $163,225; plus $20,457.75
- 35% on the income over $163,225; plus $44,160.00
Head of Household Filing Status
(Tax Rate Schedule Z)- 10% on the income between $0 and $10,450
- 15% on the income between $10,450 and $39,800; plus $1,045.00
- 25% on the income between $39,800 and $102,800; plus $5,447.50
- 28% on the income between $102,800 and $166,450; plus $21,197.50
- 33% on the income between $166,450 and $326,450; plus $39,019.50
- 35% on the income over $326,450; plus $91,819.50
Tax Calculation Example
Mary is a single taxpayer with $350,000 of taxable income. Her income is taxed in each of the tax brackets, as follows:- $730.00 (tax on the first $7,300 of Mary's income, taxed at the 10% rate), plus
- $3,360.00 (tax on the income between $7,300 and $29,700, taxed at the 15% rate), plus
- $10,562.50 (tax on the income between $29,700 and $71,950, taxed at the 25% rate), plus
- $21,896.00 (tax on the income between $71,950 and $150,150, taxed at the 28% rate), plus
- $58,179.00 (tax on the income between $150,150 and $326,450, taxed at the 33% rate), plus
- $8,242.50 (tax on the income over $326,450, taxed at the 35% rate), for a grand total tax of
- $102,970.00.
Mary's marginal tax rate is 35%. The next dollar Mary earns will be taxed at 35%. However, Mary's average tax rate is 29% (total tax divided by taxable income). On average Mary is paying only 29 cents for every dollar of taxable income she earns. Mary's average tax rate is lower than her marginal tax rate because most of her income is taxed at lower tax rates.
Are 2005 tax rates better than the 2004 rates? We can compare the changes in the marginal tax rates by comparing Mary's total tax using 2004 income tax rates. If Mary had the same taxable income of $350,000 in 2004, her total tax liability would be $103,408. Mary's taxes are lower in 2005 because of changes in the income tax brackets.
