IRS Releases the 2015 Tax Brackets

November 3, 2014

Kyle Pomerleau

Kyle Pomerleau

Last week, the IRS released its calculation of the 2015 tax brackets and other parameters.

Every year, the IRS adjusts more than 40 tax provisions for inflation. This is done to prevent what is called “bracket creep.” This is the phenomenon by which people are pushed into higher income tax brackets or have reduced value from credits or deductions due to inflation instead of an actual increase in real income.

The IRS uses the Consumer Price Index (CPI) to calculate the past year’s inflation and adjusts income thresholds, deduction amounts, and credit values accordingly.

Table 1. 2015 Taxable Income Brackets and Rates
Rate Single Filers Married Joint Filers Head of Household Filers
10% $0 to $9,225 $0 to $18,450 $0 to $13,150
15% $9,225 to $37,450 $18,450 to $74,900 $13,150 to $50,200
25% $37,450 to $90,750 $74,900 to $151,200 $50,200 to $129,600
28% $90,750 to $189,300 $151,200 to $230,450 $129,600 to $209,850
33% $189,300 to $411,500 $230,450 to $411,500 $209,850 to $411,500
35% $411,500 to $413,200 $411,500 to $464,850 $411,500 to $439,000
39.6% $413,200+ $464,850+ $439,000+

Since the method by which the IRS adjusts tax provisions are written into law, we calculated these adjustments earlier last month when the final CPI number of FY 2014 was released.

For more inflation-adjusted provisions and an explanation of how the IRS does this, here

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A tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities.

Inflation is when the general price of goods and services increases across the economy, reducing the purchasing power of a currency and the value of certain assets. The same paycheck covers less goods, services, and bills. It is sometimes referred to as a “hidden tax,” as it leaves taxpayers less well-off due to higher costs and “bracket creep,” while increasing the government’s spending power.

A tax bracket is the range of incomes taxed at given rates, which typically differ depending on filing status. In a progressive individual or corporate income tax system, rates rise as income increases. There are seven federal individual income tax brackets; the federal corporate income tax system is flat.

Taxable income is the amount of income subject to tax, after deductions and exemptions. For both individuals and corporations, taxable income differs from—and is less than—gross income.