| Abstrakt: |
Statutory individual income tax rates are the tax rates that apply by law to various amounts of taxable income. Statutory rates form the basis of marginal effective and average effective tax rates, which most economists believe have a greater impact on the economic behavior of companies and individuals than do statutory rates. Marginal effective rates reflect the net effect of special tax provisions on statutory rates. They differ from average effective rates, which measure someone's overall tax burden. Current statutory and effective individual tax rates are the result of the Tax Reform Act of 1986 (TRA86; P.L. 99-514) and several tax laws that have been enacted since 1986. Of particular importance among the latter are the Omnibus Budget Reconciliation Act of 1990 (OBRA90; P.L. 101-508), the Omnibus Budget Reconciliation Act of 1993 (OBRA93; P.L. 103-66), the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA; P.L. 107-16), the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (TRUC; P.L. 111-312), and the American Taxpayer Relief Act of 2012 (ATRA, P.L. 112-240). TRA86 altered the income tax rate structure. EGTRRA established what are referred to as the Bush-era tax cuts for individuals. TRUC extended those cuts for another two years, through 2012. And ATRA permanently extended the Bush-era tax rates for taxpayers with taxable incomes below $400,000 for single filers and $450,000 for joint filers but reinstated the 39.6% top rate established by OBRA93 for taxpayers with taxable incomes equal to or above those amounts. There are seven statutory individual income tax rates in 2017 for ordinary income: 10%, 15%, 25%, 28%, 33%, 35%, and 39.6%. Income from long-term capital gains and dividends is taxed at 0% for individuals subject to the 15% tax bracket; 15% for individuals subject to the 25%, 28%, 33%, or 35% brackets; and 20% for taxpayers taxed at 39.6%. Since 2013, a 3.8% tax has been imposed on the lesser of net investment income received by individuals, estates, or trusts, or the amount of their modified adjusted gross incomes above $250,000 for joint filers and $125,000 for single filers. In addition, the individual alternative minimum tax (AMT), which functions like a separate income tax in that its rate structure is more compressed and tax base wider than those of the regular income tax, applies to income above exemption amounts of $84,500 for joint filers and $54,300 for single filers in 2017, at rates of 26% and 28%. Tax rates and the income brackets to which they apply are not the only elements of the individual income tax that determine the tax liabilities of taxpayers. Personal exemptions, exclusions, deductions, credits, and certain other elements have an effect as well. Some of these elements are indexed for inflation. Congress added annual indexation to the individual income tax in 1981. Such a mechanism helps prevent tax increases and unintended shifts in the distribution of the tax burden driven by inflation alone. The indexed elements are tax rate brackets, personal exemptions and their phaseout thresholds, standard deductions, the itemized deduction limitation threshold, and the AMT exemption amounts. This report summarizes the tax brackets and other key elements of the individual income tax that help determine taxpayers' marginal and average effective tax rates going back to 1988. It is updated annually to reflect the most recent indexation adjustments and any changes in tax law. [ABSTRACT FROM AUTHOR] |
