Question

14. What are the highest tax rates for each of the following scenarios?

____. Operating income from a hotel earned by a foreign corporation (excluding branch profits tax)

____. Interest income earned by a foreign corporation from a US borrower

____. Net rental income earned by an U.S. individual (exclude the passthrough deduction)

____. Capital gain earned by an U.S. individual

____. Interest income earned by a U.S. corporation

____. Capital gain earned by an U.S. corporation

____. Depreciation recapture on the sale of U.S. real estate (Section 1250 property) for an individual

____. Depreciation recapture on the sale of U.S. real estate (Section 1245 property) for an individual

Answer 1

Tax rate	Married filing jointly or qualifying widow	Married filing separately
10%	Up to $9,325	Up to $13,350
15%	$9,326 to $37,950	$13,351 to $50,800
25%	$37,951 to $91,900	$50,801 to $131,200
28%	$91,901 to $191,650	$131,201 to $212,500
33%	$191,651 to $416,700	$212,501 to $416,700
35%	$416,701 to $418,400	$416,701 to $444,550
39.6%	$418,401 or more	$444,551 or more
10%	Up to $18,650	Up to $9,325
15%	$18,651 to $75,900	$9,326 to $37,950
25%	$75,901 to $153,100	$37,951 to $76,550
28%	$153,101 to $233,350	$76,551 to $116,675
33%	$233,351 to $416,700	$116,676 to $208,350
35%	$416,701 to $470,000	$208,351 to $235,350
39.6%	$470,001 or more	$235,351 or more

Taxpayers fall into one of seven brackets, depending on their taxable income: 10%, 15%, 25%, 28%, 33%, 35% or 39.6%. Because the U.S. tax system is a progressive one, as income rises, increasingly higher taxes are imposed. But those in the highest bracket don’t pay the highest rate on all their income. For example, for 2017 taxes, single individuals pay 39.6% only on income above $418,401 (above $470,001 for married filing jointly); the lower tax rates are levied at the income brackets below that amount, as shown in the table below.

The table displays tax brackets according to filing status: single, married filing jointly or qualifying widower, head of household and married filing separately. The IRS makes inflation adjustments each year.

Federal tax brackets: 2018 tax brackets (for taxes due April 15, 2019)

Tax rate	Single	Head of household
10%	Up to $9,525	Up to $13,600
12%	$9,526 to $38,700	$13,601 to $51,800
22%	$38,701 to $82,500	$51,801 to $82,500
24%	$82,501 to $157,500	$82,501 to $157,500
32%	$157,501 to $200,000	$157,501 to $200,000
35%	$200,001 to $500,000	$200,001 to $500,000
37%	$500,001 or more	$500,001 or more
Tax rate	Married filing jointly or qualifying widow	Married filing separately
10%	Up to $19,050	Up to $9,525
12%	$19,051 to $77,400	$9,525 to $38,700
22%	$77,401 to $165,000	$38,701 to $82,500
24%	$165,001 to $315,000	$82,501 to $157,000
32%	$315,001 to $400,000	$157,001 to $200,000
35%	$400,001 to $600,000	$200,001 to $300,000
37%	$600,001 or more	$300,001 or more

Taxpayers fall into one of seven brackets, depending on their taxable income: 10%, 12%, 22%, 24%, 32%, 35% or 37%. Because the U.S. tax system is a progressive one, as income rises, increasingly higher taxes are imposed. But those in the highest bracket don’t pay the highest rate on all their income. For example, in 2018, single individuals pay 37% only on income above $500,000 (above $600,000 for married filing jointly); the lower tax rates are levied at the income brackets below that amount, as shown in the table below.

The table displays tax brackets according to filing status: single, married filing jointly or qualifying widower, head of household and married filing separately. The IRS makes inflation adjustments each year.