# What Tax Bracket Do You Fall Into?

Knowing which tax bracket you fall into can be one of the hardest aspects of filing your taxes. But accurately determining where your income falls is an important step in finding ways to lower your taxes. Of course, it’s always good to get an expert — or at least an online tax program — to verify your calculations.

Typically, tax brackets adjust each year. Currently, there are seven tax brackets where you may fall. Here are the brackets for 2020:

• 37% for incomes over \$518,400 (\$622,050 for married couples filing jointly)
• 35% for incomes over \$207,350 (\$414,700 for married couples filing jointly)
• 32% for incomes over \$163,300 (\$326,600 for married couples filing jointly)
• 24% for incomes over \$85,525 (\$171,050 for married couples filing jointly)
• 22% for incomes over \$40,125 (\$80,250 for married couples filing jointly)
• 12% for incomes over \$9,875 (\$19,750 for married couples filing jointly)
• 10% for incomes of \$9,875 or less (\$19,750 for married couples filing jointly)

## How Do Tax Brackets Work?

Your taxable income determines which tax bracket you fall into. Since the US uses a progressive tax rate, higher-income workers have a higher tax burden. Additionally, a graded system ensures people only pay a certain percentage of income that falls into a specific bracket.

If you want to find out where you fall, you will need:

• Income
• Your marginal and effective tax rate

The four main filing statuses are:

• Single
• Married filing jointly
• Married filing separately

Determining how much of your income is subject to taxes can be challenging, especially if your math skills are rusty. If you’re unsure of your calculations, get help from a professional or use a tax software program.

Here’s how to find your taxable income:

2. Subtract your exclusionary income (e.g., returns from a life insurance policy) from the total amount to determine your gross income
3. Subtract tax adjustments (e.g., student loan interest, retirement contributions, etc.) to find your adjusted gross income
4. Subtract your tax deductions and choose either the standard or itemized deduction
5. If you take the itemized deduction, subtract below-the-line deductions (e.g., charitable donations or mortgage interest)

The resulting amount will tell you which tax bracket you fall in. However, be mindful that some investment returns are taxed differently than the standard income rate, which could change your sum.

## Find Ways To Reduce Your Tax Bill

Everyone wants to pay less on their taxes, especially if your taxable income barely meets a higher tax bracket. Luckily, there are many ways to do it, and the most suitable time is before the tax year ends.

Here, you may want to suspend income or contributions to your health savings, retirement, and other taxable accounts. If you plan on taking an itemized deduction, this is also time to make your end-of-year charity donations. But of course, the best way to get a lower tax rate is by working with a professional.

##### Sources
• “IRS Provides Tax Inflation Adjustments for Tax Year 2020.” Internal Revenue Service, www.irs.gov/newsroom/irs-provides-tax-inflation-adjustments-for-tax-year-2020.
• Snider, Susannah. “Tax-Filing in 2020: What Is My Tax Bracket?” U.S. News & World Report, U.S. News & World Report, 15 Oct. 2020, money.usnews.com/money/personal-finance/taxes/articles/whats-my-tax-bracket.