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2017 Marginal vs. Effective Income Tax Rates

There is a big difference between the "marginal" rates that you see published in tables such as the ones lower on this page, and the effective tax rate which you will actually pay when it's all said and done. (Good news: the effective rate is almost always lower).

This page:

  • Explains the difference between the two types of tax rates.

  • Outlines how your effective tax rate is calculated.

  • Lists the tax rates for fiscal year 2017 by income level.

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If you want to avoid costly mistakes, while at the same time taking advantage of all credits and deductions, you'll want to do your taxes with TurboTax this year.

TurboTax helps you work quickly and easily, and it double-checks your return to help you get the largest possible refund. You can even file your state taxes and get your state refund (which may be substantial) much faster than if you mail a paper return.

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Do You Know How Much Tax You Will Actually Pay?

To calculate your effective tax rate, meaning the "overall" rate you will actually pay, you will need to do a little math.

For example, if you are a single filer, and your taxable income in 2017 was $48,000, it falls in the 25% tax bracket (we are assuming all exemptions, credits, deductions, whatnot have already been factored in - this is what's known as your Taxable Income).

Anyway, only a portion of that $48,000 figure gets taxed at the 25% rate. The math works like this:

The first $8,925 is taxed @ 10% = $892.50 tax
The next $27,325 is taxed @ 15% = $4,098.75 tax
The last $11,750 is taxed @ 25% = $2,937.50 tax
The total $48,000 is taxed $7,928.75 or @ 16.5%

The 16.5% figure above represents your actual, effective tax rate.

To put it in plain English you will only pay 10% for the first part of your income, followed by 15% for what you earn above the minimum for that bracket, and finally 25% for everything above what qualifies for that bracket but below the next one, which is 28%.

This same rule applies to everyone, including those paying 39.6%. If you were fortunate enough to earn a million dollars in 2017, you won't have to pay 39.6% to the government on the whole million, just on every dollar above the 39.6% bracket. And so on.

This may sound like a mouthful, but it's actually quite simple to understand once you figure it out, and in any case, TurboTax Online will figure it out for you instantly. You can work on your return for free, and you may even qualify for a free filing, depending on which forms you file.

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The actual tax rate tables

Because of inflation adjustments, the income tax rate tables change slightly every year.

However, this year, due to legislation passed by Congress, there is a new top tax bracket that affects top income earners.

Here are the marginal tax rates for 2017, broken down by filing status and income brackets:

Tax Rate





























$400,000 and up

$450,000 and up

$425,000 and up

Source: Internal Revenue Service

Of course, to figure our exactly how much you owe (or how much the IRS owes you!) you need to prepare your return, so as that you know that you are working with the correct taxable income figure.

Do yourself a favor, and work on your tax return online, using TurboTax, and all the calculations will be performed for you, mistake-free. You will also have the peace of mind of knowing that all credits and deductions are accounted for, and if you are owed a refund, you'll get it 2-3 weeks faster.

Try it - it's free for everyone to start, and free for many to file.

Related IRS Publications

To get an exact amount of income tax owed for your income level, download the IRS Tax Tables.

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