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New year, new tax brackets. Here's where you stand

Key Points
  • The seven bracket system stays in place.
  • New rates are 10 percent, 12 percent, 22 percent, 24 percent, 32 percent, 35 percent and 37 percent.
President Donald Trump speaks about the tax reform legislation in the Grand Foyer of the White House in Washington, DC, December 13, 2017.
Saul Loeb | AFP | Getty Images

It's now 2018, and a raft of changes to the tax code are in effect – including updates to income tax brackets.

The Tax Cuts and Jobs Act, signed into law by President Donald Trump in December, maintains the same seven-bracket structure that was in force previously. However, Congress has tweaked the rates and the income levels at which they apply.

Prior to the new law, the seven tax brackets were 10 percent, 15 percent, 25 percent, 28 percent, 33 percent, 35 percent and 39.6 percent.

Now, the tax code pegs the new rates at 10 percent, 12 percent, 22 percent, 24 percent, 32 percent, 35 percent and 37 percent.

See below for a breakdown of the income tax brackets for singles.

New single tax rates 171215 EC MERCADO

Rate Taxable Income Bracket
10%"0 to $9,525"
12%"$9,525 to $38,700"
22%"$38,700 to $82,500"
24%"$82,500 to $157,500"
32%"$157,500 to $200,000"
35%"$200,000 to $500,000"
37%"$500,000 and up"

Here are the rates for married couples who file jointly.

New married tax rates 171215 EC MERCADO

Rate Taxable Income Bracket
10%"0 to $19,050"
12%"$19,050 to $77,400"
22%"$77,400 to $165,000"
24%"$165,000 to $315,000"
32%"$315,000 to $400,000"
35%"$400,000 to $600,000"
37%"$600,000 and up"

Finally, these are the rates for heads of household.

HOH Tax rates 171222 EC MERCADO

Rate Taxable Income Bracket
10%"0 to $13,600"
12%"$13,600 to $51,800"
22%"$51,800 to $82,500"
24%"$82,500 to $157,500"
32%"$157,500 to $200,000"
35%"$200,000 to $500,000"
37%"$500,000 and up"

For comparison, here's how 2018 brackets would have looked under the old tax code.

Old 2018 rates 171222 EC MERCADO 

Rate Single Married Filing Jointly Head of Household
10%"0 to $9,525""0 to $19,050""0 to $13,600"
15%"$9,525 to $38,700""$19,050 to $77,400""$13,600 to $51,850"
25%"$38,700 to $93,700""$77,400 to $156,150""$51,850 to $133,850"
28%"$93,700 to $195,450""$156,150 to $237,950""$133,850 to $216,700"
33%"$195,450 to $424,950""$237,950 to $424,950""$216,700 to $424,950"
35%"$424,950 to $426,700""$424,950 to $480,050""$424,950 to $453,350"
39.60%"$426,700 and up""$480,050 and up""$453,350 and up"

Financial advisors have been concerned about the rates and brackets because they are instrumental in shaping financial planning strategies. That includes managing retirees' income in order to get the preferential rate of zero on long-term capital gains and dividends.

"The rates are one thing, but the brackets — we want to know at what income levels do these brackets apply," said Keith Fenstad, partner and director of financial planning at Tanglewood Total Wealth Management in Houston.

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