tax rate overview

The Cuts and Jobs Act of 2017 is the largest for over 30 years, which has significant impacts on individual taxpayers. Under the TCJA, the effective rate of federal tax on income was reduced, certain deductions were eliminated and credits were enhanced. The effective rate of federal tax on income ranges from 0% to 50% for the tax year 2018 and 2019. • • • • Contribution Tax onnetinvestmentincome)are: The most common federal tax rates (exclusive of the Medicare • • • • • • • • • • including: factors, a rateof approximately 50%in2018and2019dependingonmany from notaxatallto you receive from yourdeductions—canvary The rateof taxyoupayonyourincome—aswellthebenefit   of wages isapproximately 46% and50%for self-employment $128,400 ($132,900for 2019) For 2018, the top rate for the first income over$500,000($510,300 in2019). with taxable $600,000 ($612,350 in 2019) andforsingletaxpayers withtaxableincomeover term capitalgainsformarriedfilers income, such asshort-For 2018,the 37%highest rate for ordinary incomesubjecttotheAMT.28% forordinary incometaxrates. are nolongertiedtotheordinary qualified are based ontheir own and they the preferential tax rates for the net long-term capital gainsand UndertheTCJA,($434,550 in2019)forsingleindividualtaxpayers. $479,000 ($488,850in2019)formarriedfilingjointand$425,800 dividends are with applicable taxable toincome taxpayers over the20%taxratefornetlong-termFor 2018, gainsandqualified Are credits availabletooffset yourtax? base? Is any of your income eligible to be excluded from your taxable threshold? year to meet the itemized deduction deductions in a particular Should youaccelerateyourcharitablecontributionsandcertain Are youtakingtheitemizeddeductionsorstandard deduction? Is anyof yourincomesubjecttoself-employment tax? Are yousubjecttotheMedicare Wage Surcharge? income? Are yousubjectto theMedicare ContributionTax onnetinvestment Are yousubjecttotheAMT? rate becauseof nettingrules? Are youlosingtheadvantageof thelowerlong-term capital gains incomeornetlong-term capitalgainincome? qualifying the natureis income, What of ordinary Is it income? your             or Scorporation. LLC income passingthrough to youfromordinary apartnership, Social Securitybenefits,alimony, andyourdistributiveshare of income, taxable retirement plan distributions, rental income, taxable dividend interestemployment income, income,nonqualifying andself- incomeprimarilyincludes wages,business Ordinary • • income. Buthere are thebasicrules: is in discussed dividend and detail capital on chapter the in gains income. This to be taxed at lower maximum tax rates than ordinary Long-term capital gains and income are eligible jointly andsingletaxpayers. income in2018and2019formarried filing that applytoordinary 1 shows the different tax brackets on net investment income. Chart rate as high as 40.80%, inclusive of the Medicare Contribution Tax income and,therefore, same rate asordinary could be taxed at a For 2018and2019,netshort-term capitalgainsare subjecttothe RATES CAPITAL GAIN AND DIVIDEND INCOME RATES for married taxpayers filingseparately). for marriedtaxpayers more $125,000 and formarriedtaxpayers ($250,000 $200,000 than Medicare Tax (orHospitalInsuranceTax) paidbythoseearning self-employment income.Also,there isanother0.9%Additional for employees.Fortheself-employed, therateis2.9%of all the FICA tax remains unchanged at1.45% onallincome earned forself-employed(12.4% of individuals).TheMedicare portion pay remains incomelistedherein unchangedat6.2% onthefirst of SocialSecurityFICAtaxthatemployees income. Theportion 20%), such as dividends from a money market fund or nonqualified 20%), suchasdividendsfrom amoneymarket fundornonqualified forthepreferentialDividends thatdonotqualify rateof 15%(or with taxable income over $488,850 and $434,550 for single filers). applies tonetlong-term capitalgains(20%formarriedtaxpayers qualified foreign corporationsare ratethat taxedatthesame15% For 2019, dividends received from most domestic corporations and term capitalgains. TaxContribution on net investment income, including net long- for more than12months.There isanadditional3.8%Medicare long-term capitalgainstreatment, youmusthaveheldtheasset some cases,theformer 15%ratemaystillapply. To benefitfrom discussed inthechapteroncapitalgainsanddividendincome.In regular taxandtheAMT—withseveralnotableexceptionstobe thresholds) for both the your (if taxable income exceeds certain Net long-term capitalgainsare taxedatamaximumrateof 20%  

overview 15 EisnerAmper 2019 personal tax guide 16 taxpayers filingashead taxpayers of household. as headof filingseparatelyand household.SeeAppendixCfordetailed2019tax rate schedules,includingtaxratesformarriedtaxpayers Note: 2018 FEDERAL TAX RATE SCHEDULES 2018 AND 2019 FEDERAL TAX RATE SCHEDULES 0 $ 0 $ Taxable Income Married Filing JointlyorQualifying Widow(er) tax rates for married taxpayers filing separately and taxpayers filing filing filingseparatelyandtaxpayers See AppendixBfordetailed2018tax rateschedules,includingtaxratesformarriedtaxpayers 400,000 200,000 600,000 500,000 315,000 165,000 157,500 82,500 38,700 77,400 19,050 9,525 $ 0 $ Base Tax Single 150,689.50 161,379.00 8,907.00 45,689.50 32,089.50 14,089.50 64,179.00 28,179.00 91,379.00 4,453.50 1,905.00 952.50 0 Next Dollar) Marginal Tax Marginal Tax Rate (Taxon 24% 24% 32% 22% 35% 32% 35% 22% 37% 37% 10% 12% 12% 10% 2019 FEDERAL TAX RATE SCHEDULES 0 $ 0 $ Taxable Income Married Filing JointlyorQualifying Widow(er) 408,200 321,450 204,100 168,400 612,330 510,300 160,725 84,200 39,475 78,950 19,400 9,700 $ $ Base Tax Single 164,709.50 153,798.50 9,086.00 46,628.50 32,748.50 65,497.00 93,257.00 28,765.00 14,382.50 4,543.00 1,940.00 970.00 0 0 Next Dollar) Marginal Tax Marginal Tax Rate (Taxon chart 1 24% 24% 32% 22% 35% 32% 22% 35% 37% 37% 12% 10% 10% 12% the singleindividual’s taxbracketsandrates.Therefore, the“kiddie of thechildisbeingtaxedat the taxableearned incomeportion is taxedatthetrustsandestatestaxbracketsrates,whereas unearned incomeof achild.Thechild’s nettaxableunearned income capital gainsratesapplicabletotrustsandestatesthenet and 2025, the “kiddie tax” is simplified by applying the ordinary The TCJA hassimplifiedthe“kiddietax.” 2018through Fortaxyears for amore detaileddiscussion. willbesubjecttoAMT.less taxpayers SeethechapteronAMT out threshold amountshaveincreased significantly, which means, through2018 exemption phase and exemption AMT the 2025, base, itshouldresult inagreater beginning tax.Fortaxyears regular tax rateof 37%,ifitappliestoahighertaxableincome highest the lowerthan is income onordinary rate AMT the While term totheAMT. capitalgainsandqualifieddividendsalsoapplies of 28%.Asmentionedabove,the15%or20%rateonnetlong- income subject totheAMTistaxed at amaximum rate Ordinary **Includes 0.9%HospitalInsuranceTax income thresholds. foramountsabovecertain * Thetaxrateisactually2.9%,butonly 92.35%of self-employment incomeissubjecttotheMedicare Tax. KIDDIE TAX net investmentincomethatmayalsoapplytodividendincome. rates. There isanadditional 3.8%Medicare Contribution Tax on incometax foreign corporations,are subjecttothehigherordinary SOCIAL SECURITY AND MEDICARE FOR 2018 AND 2019 Social Security2018 Medicare 2018 Maximum Income Subject toTax 2019 2019 $128,400 $132,900 No limit No limit 6.2%/$8,239.80 each 6.2%/$7,960.80 each 1.45%/No limit 2.35%/No limit** 2.35%/No limit** 1.45%/No limit Employer andEmployee income (seebelow). be subjecttotheMedicare ContributionTax onnetinvestment extent thatrateappliestotrustsandestates.Thechildmay also income iseligible for the preferential tax rate of 15%or20%to the dividend income suchasnetlong-term capitalgainsandqualifying tax brackets and rates. is taxedat Unearned the single taxpayer’s extent thatthechildhasearned incomesuchaswages,that excess of $12,500 will be taxed at 37% the maximum rate. To the applicable to the trusts and estates. For 2018, unearned income in and capital gains rates that are for 2019) is taxed at the ordinary tax-free. Any excess of unearned income above ($2,200 $2,100 $2,100ofrate. For2018,thefirst thechild’s unearned incomeis time studentunderage24,isnolongertaxedattheparents’ tax For 2018,theunearned incomeof achildunderage19,orfull- situations. tax” calculationisnolongeraffectedbytheparent’s orsiblings’tax taxes almost doubles because you pay both the employer’s and and taxes almostdoublesbecauseyoupayboththeemployer’s If you are self-employed, your share of Social Security and Medicare subject totheMedicare ContributionTax. 2),butallearned incomeis Social Securitytaxislimited(seeChart Security and Medicare taxes. The amount of income subject to the Your wages and self-employment income are also subject to Social EMPLOYMENT TAXES Portion Tax Rates/Maximum TaxCost Tax Rates/Maximum 12.4%/$16,479.60 12.4%/$15,921.60 3.578%/No limit** 2.678%/No limit* 3.578%/No limit** 2.678%/No limit* Self-Employed chart

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tax rate overview 17 EisnerAmper 2019 personal tax guide 18 are notindexedforinflation. Contribution Tax onnetinvestmentincome).Thethreshold amounts qualified dividendswillbe23.8%(20%plus3.8%additionalMedicare The maximumfederaltaxrateonlong-term capitalgainsand miscellaneous itemizeddeductionsare suspended duetotheTCJA. taxes, and investment interest expenses. For 2018 through 2025, the income. Suchexpensesincludedirectly allocablestateandlocal income maybereduced byexpensesassociatedwithearning that instruments orcommodities.Theamountof gross investment from passive business activities andincome from trading infinancial interest, royalties, annuities, capitalgains, dividends, rents, income threshold amounts stated above. Net investment income includes your netinvestmentincomeorAGI inexcessof theapplicable of lesser tothe apply will tax The separate. filing married if $125,000 widow(er)withdependentchild),$200,000ifsingle,and qualifying modifications) isinexcessof $250,000forajointreturn (and The additional3.8%taxwillapplyifyourAGI (withcertain beginningin2013. for years for a3.8%taxonnetinvestmentincomeof higherincometaxpayers The HealthCare andEducationReconciliationActof provided 2010 The threshold amountsare notindexedforinflation. married filing separate returns and $200,000 for all other taxpayers. of $250,000formarriedcouplesfilingjointreturns, $125,000for This taxappliestowagesand/orself-employment incomeinexcess An additional0.9%HospitalInsuranceTax applies toearned income. a deductionagainstAGI for 50%of theself-employment taxyoupay. reason there isnotagreater spread isprimarilybecauseyoureceive your employeeshare of SocialSecurityandMedicare taxes).The compared to about 46% for income from including wages (after of for2019) ($132,900 $128,400 high as50%onthefirst suchincome, the federaleffectivetaxrateonself-employment incomecanbeas employee’s of these taxes. As a result, portions for 2018 and 2019, INVESTMENT INCOME MEDICARE CONTRIBUTION TAX ON NET MEDICARE WAGE SURTAX subject to the 2% disallowance such as investment advisory fees, fees, subject tothe2%disallowancesuchasinvestmentadvisory 1,2018through December 31,2025.Thedeductions from January itemized deductions subject to the 2% “haircut” are suspended One of themajorchangesduetoTCJA isthemiscellaneous Suspension of miscellaneousitemized deductions 1,2026. December 31,2017andbefore January deductions are notsubject tophaseoutforanytaxyearafter are subject to 2%AGI floor limitations. Inaddition, the itemized temporarily eliminates allmiscellaneous itemized deductions that local salestaxpaidorthestateandincometaxespaid.Italso have the option to deduct either the actual state and The taxpayers and$5,000formarriedfilingseparately.for marriedorsinglefilers taxestoamaximumof state/local incometaxesandproperty $10,000 fromyears 2018through 2025,suchaslimitingthenon-business TCJAThe hasmademodificationstoitemizeddeductionsfortax standard deductioninsteadof itemizeddeductions. standard deductionamounts,more maybeclaimingthe taxpayers As aresult of thechanges initemized deductionsandtheincreased deduction amountsare adjustedforinflationannually. Thestandard for2019). ($18,350 household taxpayeris$18,000 filing separately) is for ($12,200 and $12,000 2019) for heads of spouse) is$24,000 ($24,400 for 2019),forsingle taxpayer (ormarried (orsurviving deductions amountformarriedfilingjointtaxpayers increased from for tax years 2018through 2025.In2018,the standard The standard have deductionamountsforindividualtaxpayers Standard deductions a result of theTCJA. exemption iseliminated fromThe personal 2018through 2025as Personal exemptions 1,2026. December 31,2017andbefore January expenses are temporarilyeliminatedforthetaxyearbeginningafter and subscriptions, taxreturn preparation feesand deductible legal unreimbursed professional expenses, employee business dues PERSONAL EXEMPTIONS ITEMIZED DEDUCTIONS AND