Federal Tax Brackets

AAA

DEFINITION of 'Federal Tax Brackets'

Income tax groupings specified by the Internal Revenue Service (IRS) that determine at what rate an individual, trust, or corporation's annual income will be subject to federal income tax. Federal tax brackets are adjusted periodically to account for the effects of inflation over time.

INVESTOPEDIA EXPLAINS 'Federal Tax Brackets'

Federal tax brackets are structured so that individuals or legal entities are taxed at different rates depending upon the amount of annual income they earn.

For individuals, the federal tax brackets are structured so that as an individual earns more annual income, his or her earnings are taxed at a higher rate.

Corporate federal tax brackets roughly provide for increasing tax rates as businesses earn more income, but there are usually some deviations from that general rule. For example, 2006 corporate income from $100,000 and $355,000 was taxed at a rate of 39%, while corporate income from $335,000 to $10 million was taxed at 34%.

RELATED TERMS
  1. Federal Reserve Bank

    The central bank of the United States and the most powerful financial ...
  2. Tax Season

    The time period between January 1 and April 15 of each year in ...
  3. Federal Unemployment Tax Act - ...

    The original legislation that allows the federal government to ...
  4. Tax Schedule

    A rate sheet used by individual taxpayers to determine their ...
  5. Internal Revenue Service - IRS

    A United States government agency that is responsible for the ...
  6. Tax Bracket

    The rate at which an individual is taxed. Tax brackets are set ...
Related Articles
  1. Retirement

    Tax Tips For The Individual Investor

    We give you seven guidelines to help you keep more of your money in your pocket.
  2. Retirement

    How IRA Contributions Affect Your Taxes

    Learn how to work with the tax man to avoid getting gouged when you convert your plans.
  3. Taxes

    How To Cut Your Alternative Minimum Tax

    Save yourself money by lowering the amount of tax you owe.
  4. Options & Futures

    Upon my death, will the beneficiaries of my IRA be compelled to take the entire amount in the IRA as ...

    It depends. If the beneficiary of your IRA is your spouse, he or she will be eligible to transfer the amount to his or her own IRA, from which distributions are not required until age 70.5. If ...
  5. Taxes

    Paying Uncle Sam: From Tobacco To $1 Trillion

    The services we rely on, like education, law and security, were built on taxes.
  6. Taxes

    Capital Gains Tax Cuts For Middle Income Investors

    Find out how TIPRA plans to slash taxes for those in the 10-15% tax bracket.
  7. Economics

    EU Probes Tax Laws To Catch Corporate Cheaters

    Recently, the EU has launched an investigation into tax deals between Amazon and the country of Luxembourg.
  8. Taxes

    How To Deduct All Of Your Charitable Donations?

    Donations made to charitable organizations can reduce your taxable income, thus your overall tax bill. But not all donations qualify to be deductable.
  9. Professionals

    How are an employee's fringe benefits taxed?

    Discover how receiving fringe benefits can increase total compensation for employees and how it is important to understand how these benefits are taxed.
  10. Taxes

    What is Value-Added Tax (VAT) and who pays it?

    Learn about the definition of value-added tax, the necessary circumstances that require a business to pay it and when a business is exempt.

You May Also Like

Hot Definitions
  1. Commercial Paper

    An unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts receivable, inventories ...
  2. Federal Funds Rate

    The interest rate at which a depository institution lends funds maintained at the Federal Reserve to another depository institution ...
  3. Fixed Asset

    A long-term tangible piece of property that a firm owns and uses in the production of its income and is not expected to be ...
  4. Break-Even Analysis

    An analysis to determine the point at which revenue received equals the costs associated with receiving the revenue. Break-even ...
  5. Key Performance Indicators - KPI

    A set of quantifiable measures that a company or industry uses to gauge or compare performance in terms of meeting their ...
  6. Bank Guarantee

    A guarantee from a lending institution ensuring that the liabilities of a debtor will be met. In other words, if the debtor ...
Trading Center