There are three sets of tax tables on this page. The first are the standard IRS tax tables demonstrating your marginal tax rates by marital status. The second are these same tables adjusted for your social security and medicare taxes if you are an employee. The third set are tax tables adjusted for an independent contractor, practice owner, or partner in which you pay both the employee and the employer portions of the payroll taxes, reduced by the self-employment tax deduction. If you wish to calculate your true marginal tax rate, be sure to add in your state and local income tax marginal rates.

Remember to use the 2011 Tax Brackets to calculate tax due in April 2012.

2012 Standard Tax Table- Married Filing Joint
Marginal Tax Bracket Taxable Income
10% < $17,400
15% $17,400-70,700
25% $70,700-142,700
28% $142,700-$217,450
33% $217,450-$388,350
35% >388,350
2012 Standard Tax Table- Single
Marginal Tax Bracket Taxable Income
10% < $8700
15% $8700- $35,550
25% $35,550-85,650
28% $85,650-$178,650
33% $178,650-$388,350
35% >$388,350

 

So far so good. We’ve all seen these before. But what happens if you adjust them for those additional taxes you see come out of each paycheck-your social security and medicare taxes?

2012 Total Tax Table for Married Employees (One earner)
Marginal Tax Bracket Taxable Income
15.65% <$17,400
20.65% $17,400-70,700
30.65% $70,700-110,100
26.45% $110,100-142,700
29.45% $142,700-217,450
34.45% $217,450-388,350
36.45% >$388,350
2012 Total Tax Table for Single Employees
Marginal Tax Bracket Taxable Income
15.65% <$8700
20.65% $8700-35,550
30.65% $35,550-$85,650
33.65% $85,650-110,100
29.45% $110,100-178,650
34.45% $178,650-388,350
36.45% >$388,350

 

Looking at the tax brackets in this way, you realize just how high your marginal tax rates can be, and this doesn’t even include state and local taxes. It also displays the regressive nature of the payroll taxes. Although lower earners get more relative benefit from social security, many actually pay more in social security tax than in federal income tax, especially after all the deductions and credits they qualify for. It is interesting to note that the $100,000 earner and the $350,000 earner (single) have about the same total marginal tax rate. Keep in mind that these tax rates are 2% lower than they would be without the special payroll tax cut implemented in 2011 (and so far extended through February 2012).  Also, note that if there are two earners, you can add 4.2% to the married tax brackets up until both earners hit the $110,100 limit. But what if you are self-employed? Well, things get worse.

2012 Total Tax Tables for Married Self-Employed (One earner)
Marginal Tax Bracket Taxable Income
22.64% <$17,400
27.30% $17,400-$70,700
36.64% $70,700-110,100
27.54% $110,100-142,700
30.49% $142,700-217,450
35.42% $217,450-388,350
37.39% >388,350

 

2012 Total Tax Tables for Single Self-Employed
Marginal Tax Bracket Taxable income
22.64% <8,700
27.30% $8,700-35,550
36.64% $35,550-85,650
39.44% $85,650-110,100
30.45% $110,100-178,650
35.42% $178,650-388,350
37.39% >388,350

 

These tables include the employee and employer portion of social security and medicare taxes, reduced by the self-employment tax deduction. The alarming size of the “donut hole” is impressive. A single taxpayer earning $87,000 has a higher marginal tax rate than a star NFL quarterback. Likewise, a married taxpayer earning $37,000 in taxable income pays at a higher marginal rate than one with ten times the taxable income. What’s the moral of the story? Get to that $106,800 limit as quickly as possible to lower your marginal tax rates.