DEFINITION of 'Tax Table'

A tax table is a chart that displays the amount of tax due based on income received. The tax rate in the table may be shown as a discrete amount, a percentage rate, or a combination of both. Tax tables are used by individuals, companies, and estates for both standard income and capital gains.

BREAKING DOWN 'Tax Table'

Business and individual taxpayers pay an effective tax rate on their income every year. The tax paid by each entity depends on a number of factors, such as filing status, applicable tax deductions and credits, exemptions, and the amount of income earned in a given tax year. Based on these factors and the tax rates set for the year, taxpayers and taxing authorities can determine the amount of tax to be paid by each taxpayer.

A typical tax table will show breakpoint income levels, above and below which different tax rates will apply. However, the income used in tax tables is the taxable income, not the gross income. Taxable income refers to gross income less deductions. Thus, only the dollar amount that is left after factoring in deductions is subject to income tax. For example, the standard deduction for 2018 is $12,000 for single taxpayers. A taxpayer that earns $65,000 for the year and only qualifies for the standard deduction will pay income tax on $65,000 - $12,000 = $53,000. Generally speaking, the higher a taxpayer’s taxable income, the more s/he is taxed.

Tax tables are set up with different columns for each filing status and rows of various taxable income amounts on the left. Depending on one’s filing status – single, married filing separately, married filing jointly, or head of household – his or her tax liability can be traced on the table, and the amount transferred to the individual's income tax form. Qualifying widows or widowers can use the married filing jointly category. The following is an example of a 2017 tax table for taxpayers in the $46,000 taxable income range:

IRS Tax Table for 2017

If taxable income is -

And you are -

at least

but less than

Single

Married filing jointly

Married filing separately

Head of a household

Your tax is -

46,000

46,050

7,245

5,971

7,245

6,236

46,050

46,100

7,258

5,979

7,258

6,244

46,100

46,150

7,270

5,986

7,270

6,251

46,150

46,200

7,283

5,994

7,283

6,259

46,200

46,250

7,295

6,001

7,295

6,266

46,250

46,300

7,308

6,009

7,308

6,274

46,300

46,350

7,320

6,016

7,320

6,281

46,350

46,400

7,333

6,024

7,333

6,289

46,400

46,450

7,345

6,031

7,345

6,296

46,450

46,500

7,358

6,039

7,358

6,304

46,500

46,550

7,370

6,046

7,370

6,311

46,550

46,600

7,383

6,054

7,383

6,319

46,600

46,650

7,395

6,061

7,395

6,326

46,650

46,700

7,408

6,069

7,408

6,334

46,700

46,750

7,420

6,076

7,420

6,341

46,750

46,800

7,433

6,084

7,433

6,349

46,800

46,850

7,445

6,091

7,445

6,356

46,850

46,900

7,458

6,099

7,458

6,364

46,900

46,950

7,470

6,106

7,470

6,371

46,950

47,000

7,483

6,114

7,483

6,379

Tax tables are used most often by individuals and companies with modest levels of income. High income earners, whether individuals or corporations, tend to use more detailed tax rate schedules in conjunction with itemized deductions.

Most states use tax tables to determine personal income tax. The seven states that do not assess personal income tax are Nevada, Texas, Washington, Alaska, Florida, South Dakota, and Wyoming. Tennessee and New Hampshire only assess a tax on dividend and interest income. Tax tables will change from year to year and will vary from state to state. Investors should always be sure that they are using the correct tax tables based on their income sources and area of residence.

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