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United States Individual - Taxes on personal income

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The United States levies tax on its citizens and residents on their worldwide income. Non-resident aliens are taxed on their US-source income and income effectively connected with a US trade or business (with certain exceptions).

Personal income tax rates

For individuals, the top income tax rate for 2019 is 37%, except for long-term capital gains and qualified dividends (discussed below).

P.L. 115-97 reduced both the individual tax rates and the number of tax brackets. P.L. 115-97 sunsets after 2025 many individual tax provisions, including the lower rates and revised brackets, in order to comply with US Senate budget rules.

2019 income tax rates and brackets

Single taxpayers (1)

Taxable income (USD) Tax rate (%)
0 to 9,700 10
9,701 to 39,475 12
39,476 to 84,200 22
84,201 to 160,725 24
160,726 to 204,100 32
204,101 to 510,300 35
510,301+ 37

Married taxpayers filing jointly (1, 2)

Taxable income (USD) Tax rate (%)
0 to 19,400 10
19,401 to 78,950 12
78,951 to 168,400 22
168,401 to 321,450 24
321,451 to 408,200 32
408,201 to 612,350 35
612,351+ 37

Head-of-household taxpayers (1, 2)

Taxable income (USD) Tax rate (%)
0 to 13,850 10
13,851 to 52,850 12
52,851 to 84,200 22
84,201 to 160,700 24
160,701 to 204,100 32
204,101 to 510,300 35
510,301+ 37

Married taxpayers filing separately (1)

Taxable income (USD) Tax rate (%)
0 to 9,700 10
9,701 to 39,475 12
39,476 to 84,200 22
84,201 to 160,725 24
160,726 to 204,100 32
204,101 to 306,175 35
306,176+ 37

2018 income tax rates and brackets

Single taxpayers (1)

Taxable income (USD) Tax rate (%)
0 to 9,525 10
9,526 to 38,700 12
38,701 to 82,500 22
82,501 to 157,500 24
157,501 to 200,000 32
200,001 to 500,000 35
500,001+ 37

Married taxpayers filing jointly (1, 2)

Taxable income (USD) Tax rate (%)
0 to 19,050 10
19,051 to 77,400 12
77,401 to 165,000 22
165,001 to 315,000 24
315,001 to 400,000 32
400,001 to 600,000 35
600,001+ 37

Head-of-household taxpayers (1, 2)

Taxable income (USD) Tax rate (%)
0 to 13,600 10
13,601 to 51,800 12
51,801 to 82,500 22
82,501 to 157,500 24
157,501 to 200,000 32
200,001 to 500,000 35
500,001+ 37

Married taxpayers filing separately (1)

Taxable income (USD) Tax rate (%)
0 to 9,525 10
9,526 to 38,700 12
38,701 to 82,500 22
82,501 to 157,500 24
157,501 to 200,000 32
200,001 to 300,000 35
300,001+ 37

Notes

  1. The maximum federal tax rate on capital gains is 20% for assets held for more than 12 months. The graduated rates of tax apply to capital gains from assets held for 12 months or less.
  2. Non-resident aliens may not take advantage of head of household status or joint return rates.

Alternative minimum tax (AMT)

In lieu of the tax computed using the above rates, the individual AMT may be imposed under a two-tier rate structure of 26% and 28%. For tax year 2019, the 28% tax rate applies to taxpayers with taxable incomes above USD 194,800 (USD 97,450 for married individuals filing separately).

Under P.L. 115-97, for tax years beginning after 31 December 2017, and before 1 January 2026, the AMT exemption amount is increased to USD 109,400 for married taxpayers filing a joint return (half this amount for married taxpayers filing a separate return), and USD 70,300 for all other taxpayers (other than estates and trusts). The phase-out thresholds increase to USD 1 million for married taxpayers filing a joint return and USD 500,000 for all other taxpayers (other than estates and trusts). These amounts are indexed for inflation. For 2019, the AMT exemption amount is USD 111,700 for married taxpayers filing a joint return (half this amount for married taxpayers filing a separate return) and USD 71,700 for all other taxpayers (other than estates and trusts), and the phase-out thresholds are USD 1,020,600 for married taxpayers filing a joint return and USD 510,300 for all other taxpayers (other than estates and trusts).

The AMT is payable only to the extent it exceeds the regular net tax liability. The foreign tax credit is available for determining AMT liability to the extent of the foreign tax on the foreign-source AMT income (AMTI), subject to certain limitations.

AMTI generally is computed by starting with regular taxable income, adding tax preference deductions (claimed in the computation of regular taxable income), and making special adjustments to some of the tax items that were used to calculate taxable income. For example, the taxpayer must add back all state and local income taxes deducted in computing regular taxable income.

For non-resident aliens with a net gain from the sale of US real property interests, the AMT is calculated on the lesser of AMTI (before the exemption) or the net gain from the sale of the US real property interest.

Medicare Contribution Tax

For tax years beginning after 31 December 2012, a 3.8% 'unearned income Medicare contribution' tax applies on the lesser of (i) the taxpayer's net investment income for the tax year or (ii) the taxpayer's excess modified adjusted gross income over a threshold amount (generally, USD 200,000 for single taxpayers and heads of households; USD 250,000 for a married couple filing a joint return and surviving spouses; and USD 125,000 for a married individual filing a separate return). The tax, which is in addition to the regular income tax liability, applies to all individuals subject to US taxation other than non-resident aliens. Net investment income generally includes non-business income from interest, dividends, annuities, royalties, and rents; income from a trade or business of trading financial instruments or commodities; income from a passive-activity trade or business; and net gain from the disposition of non-business property.

State and local income taxes

Most states, and a number of municipal authorities, impose income taxes on individuals working or residing within their jurisdictions. Most of the 50 states impose some personal income tax, with the exception of Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming, which have no state income tax. New Hampshire and Tennessee only tax dividend and interest income. Few states impose an income tax at rates that exceed 10%.


Last Reviewed - 24 January 2019

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