Total Tax

What Is Total Tax?

Total tax, in the context of personal income tax, is the composite total of all taxes owed by a taxpayer for the year.

Key Takeways

  • Total tax makes up all the taxes you owe over a year.
  • Based on your income, total tax amounts are laid out in seven tax brackets from 10% to 37% depending on what you earn.
  • The IRS lists the threshold for individuals, heads of household, and married joint filers for these brackets.
  • Total tax is how the IRS figures out to see if you need a refund or if you owe the government money.
  • Deductions lower your taxable income.

Understanding Total Tax

The total tax is progressive and based on the payer's income. The Internal Revenue Service (IRS) publishes income thresholds for seven tax brackets ranging from 10% to 37% each year.

The total tax number is the next-to-last step in the tax formula, and it accounts for all credits and deductions due to the taxpayer but not any tax payments made during the year. Total tax is then compared with payments made to see whether a refund is due or a balance owed.

Total Tax Examples Under the New Tax Law

For a married couple filing jointly in 2022, the lowest total tax is 10% and applies to income up to $20,550. Thus if the couple earned $19,000, they would owe exactly $1,900 in federal income tax. A second hypothetical couple with an income over $647,850 would pay the highest percentage of 37%.

But note that the tax is graduated: the high-earning couple would owe just 10% on the first $20,550, the same as the first couple, and so on through all the brackets. The only income taxed at 37 percent would be their earnings over $647,850. As such, a couple earning $80,000 in 2022 would owe a total tax of $17,600.

 Single Taxable Income Tax Brackets and Rates, 2021

Rate Taxable Income Bracket Tax Owed
  10% $0 to $9,950 $995 or 10% of taxable income
  12% $9,951 - $40,525 $995 plus 12% of the excess over $9,951
  22% $40,526 - $86,375 $4,664 plus 22% of the excess over $40,526
  24% $86,376 - $164,925 $14,751 plus 24% of the excess over $86,373
  32% $164,926 - $209,425 $33,603 plus 32% of the excess over $164,926
  35% $209,426 - $523,600 $47,843 plus 35% of the excess over $209,3426
  37% Over $523,600 $157,804 plus 37% of the excess over $523,600

Source: Internal Revenue Service.

Married Filing Jointly Taxable Income Tax Brackets and Rates, 2021

Rate Taxable Income Bracket Tax Owed
 
10%
$0 to $19,900 10% of taxable income
 
12%
$19,901 - $81,050 $1,990 plus 12% of the excess over $19,901
 
22%
$81,051 - $172,750 $9,328 plus 22% of the excess over $81,051
 
24%
$171,051 to $326,600 $29,211 plus 24% of the excess over $171,051
 
32%
$329,851 - $418,850 $67,206 plus 32% of the excess over $329,851
 
35%
$418,851 - $628,300 $95,686 plus 35% of the excess over $418,851
 
37%
over $628,300 $168,993.50 plus 37% of the excess over $628,300

Source: Internal Revenue Service.

Example of How Deductions Affect Total Tax

Total tax includes income, the alternative minimum tax, and self-employment tax. It is calculated after deductions, which have been simplified and somewhat increased for most filers with the latest tax reform.

For example, under the pre-2018 tax system, married couples filing jointly were entitled to a standard deduction of $13,850. In 2021, they will receive a standard deduction of $25,100, and in 2022, the standard deduction jumps $800 more. While these amounts may seem significant compared to 2018 figures, the government has also eliminated the individual exemption of $4,050 (or $8,100 for a couple).

The higher standard deduction will mean fewer homeowners can claim the mortgage interest deduction and other personal deductions, which must be higher than the standard deduction to take effect.

Finally, note that while the total tax is indeed total, it is hardly permanent. Many parts of the 2017 tax reform act have sunset provisions. The most important from the standpoint of middle-class taxpayers will be the expiration at the end of 2025 of most of the new deduction and exemption rules. Unless Congress acts before then, the total tax for most filers will then revert more or less to the previous levels.

Article Sources

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  2. Internal Revenue Service. "Publication 17: Your Federal Income Tax." Accessed Jan. 1, 2022.

  3. Tax Foundation. "2022 Tax Brackets for Single Filers, Married Couples Filing Jointly, and Heads of Households." Accessed Jan. 1, 2022.

  4. Internal Revenue Service. "Publication 501 (2017): Exemptions, Standard Deduction, and Filing Information," Page 26. Accessed Jan. 1, 2022.

  5. Internal Revenue Service, "Publication 501 (2016): Exemptions, Standard Deduction, and Filing Information," Page 11. Accessed Jan. 1, 2022.

  6. Internal Revenue Service. "Publication 936: Home Mortgage Interest Deduction." Accessed Jan. 1, 2022.

  7. U.S. Congress. "Subtitle A—Individual Tax Reform (The Tax Cut and Jobs Act 2017)," Page 1. Accessed. Jan. 1, 2022.