Federal income tax burdens people with higher incomes with taxes at high rates. The rates range from 10% to 39.6% and taxes are structured in seven tax brackets starting from low income individuals to high income individuals.

One thing is for sure: all income received is taxable unless it is excluded by law. So, you won’t only pay for salaries and wages, but also income received in the form of alimonies, unemployment compensation and pension.

The following table includes an estimate of the expected 2016 taxable income brackets and rates:

Estimated Taxable Income Rates and Brackets for 2016

Tax Rate Single Married/Joint Head of Household
10% $0 – $9,275 $0 – $18,550 $0 – $13,250
15% $9,276 – $37,650 $18,551 – $75,300 $13,251 – $50,400
25% $37,651 – $91,150 $75,301 – $151,900 $50,401 – $130,150
28% $91,151 – $190,150 $151,901 – $231,450 $130,151 – $210,800
33% $190,151 – $413,350 $231,451 – $413,350 $210,801 – $413,350
35% $413,351 – $415,050 $413,351 – $466,950 $413,351 – $441,000
39.6% $415,051 + $466,951 + $441,000 +

It seems that that majority of Americans fall into the 15% tax bracket. Households in this category pay 15 cents of each dollar they make in income taxes, but the rate is relatively low. If you consider personal exemptions, standard deduction and tax credits and fall in this tax bracket, you pay 6.5% of your income in income taxes.

Approximately 36 million households receive incomes lower than the value of personal exemptions and deductions, and they don’t fall into any of these brackets. However, not all Americans who are not called to pay income taxes fall into this category. Some households fall into a specific income tax bracket, but still pay zero taxed thanks to tax credits.

As an overall, around 77% of all American households fall in the 15% bracket or below whereas 27 million fall into the 10% bracket and 24 million in the 25% income tax bracket. The households falling into the highest income tax bracket are estimated to be a tad fewer than a million (approximately 893,000 households). At first glance, these households are called to pay 39.6% of their income in income taxes, but the rates are lower for those with incomes from dividends and long-term capital gains. The reduction is estimated around 11.1%. Most of these households pay income taxes at a rate of 28.5%, which is the higher of any other tax bracket.

US Most Taxpayers are in the 15% Tax Bracket or Below
Image Data Source: IRS Statistics of Income,Table 3.4

If you want to estimate in which tax bracket you belong, subtract any deductions and personal exemptions from the gross income you expect for the year 2016 and check the table above.