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.

 

2011 Standard Tax Table- Married Filing Joint
Marginal Tax Bracket Taxable Income
10% < $17,000
15% $17,000-69,000
25% $69,000-139,350
28% $139,350-$212,300
33% $212,300-$359,150
35% >359,150

2011 Standard Tax Table- Single
Marginal Tax Bracket Taxable Income
10% < $8500
15% $8500- $34,500
25% $34,500-83,600
28% $83,600-$174,400
33% $174,400-$379,150
35% >$379,150

 

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?

2011 Total Tax Table for Married Employees (One earner)
Marginal Tax Bracket Taxable Income
15.65% <$17,000
20.65% $17,000-69,000
30.65% $69,000-106,800
26.45% $106,800-139,350
29.45% $139,350-212,300
34.45% $212,300-359,150
36.45% >$359,150

2011 Total Tax Table for Single Employees
Marginal Tax Bracket Taxable Income
15.65% <$8500
20.65% $8500-34,500
30.65% $34,500-$83,600
33.65% $83,600-106,800
29.45% $106,800-174,400
34.45% $174,400-359,150
36.45% >$359,150

 

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 2011 payroll tax cut (employee portion is only 4.2% this year, rather than the usual 6.2%).  Also, note that if there are two earners, you can add 4.2% to the married tax brackets up until both earners hit the $106,800 limit.  But what if you are self-employed?  Well, things get worse.

2011 Total Tax Tables for Married Self-Employed (One earner)
Marginal Tax Bracket Taxable Income
22.64% <$17,000
27.30% $17,000-$34,500
36.64% $34,500-106,800
27.54% $106,800-139,350
30.49% $139,350-212,300
35.42% $212,300-359,150
37.39% >359,150

 

2011 Total Tax Tables for Single Self-Employed
Marginal Tax Bracket Taxable income
22.64% <8,500
27.30% $8,500-34,500
36.64% $34,500-83,600
39.44% $83,600-106,800
30.45% $106,800-174,400
35.42% $174,400-359,150
37.39% >359,150

 

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 $85,000 has a higher marginal tax rate than a star NFL quarterback.  Likewise, a married taxpayer earning $35,000 in taxable income pays at a higher 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.