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How do IRS tax tables work?

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Quick Answer

The Internal Revenue Service's tax tables help a taxpayer to determine his liability, explains TurboTax. When using a tax table, an individual first finds the column that contains his status as single, married filing jointly, married filing separately or head of household. Then he finds the row with his income bracket in the left column; for example, income of $65,025 is "at least 65,000 but less than 65,050." The amount at the intersection is his tax liability for the year.

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Full Answer

The IRS requires individuals with less than $100,000 in taxable income to use its tax table, while taxpayers with income above $100,000 must use a tax computation worksheet, according to the agency. Computation worksheets, which are available for each filing status along with tax tables in Publication 17, contain several rows corresponding to different tax rates for different income brackets. A taxpayer multiplies his income by the corresponding marginal rate, which can range from 28 to 39.6 percent as of August 2015. Then he subtracts an amount to adjust for the lesser tax rate on base income amounts.

Although taxpayers must use tax tables and computation worksheets rather than manual calculations to determine how much they owe, the IRS also publishes tax rate schedules, which allow individuals to understand the different tax rates applicable on each portion of their income, notes the agency. These schedules show each tax bracket and applicable marginal tax rate.

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