1. Changes in Individual Rates
2. Changes in Corporate Income Tax Rate

The IRS corporate tax rate schedule is changing in 2018 with the passage of TCJA (Tax Cuts and Jobs Act), which includes numerous changes in tax rates, brackets, and thresholds. Significant changes in the individual tax code include the elimination of personal tax exemptions and the Pease limitation on itemized deductions as well as the expansion of the Child Tax Credit.

Most filers will see lower brackets, with a new top rate of 37 percent (reduced from 39.6 percent). Now, the 10 percent bracket applies to the first $10,000 for individuals and $19,000 for joint filers. Additional changes include the doubling of standard deductions, changes in mortgage interest, AMT, and other credits and deductions.

Changes in Individual Rates

Previously, individuals' income subject to tax included "ordinary income" and most interest and retirement income, which was calculated at increasing rates applicable to varying income ranges depending on the filing status. In 2017, the seven different rates were:

  • 10 percent
  • 15 percent
  • 25 percent
  • 28 percent
  • 33 percent
  • 35 percent
  • 39.6 percent

Beginning in 2018 and continuing through 2025, the percentage rates of those seven tax brackets will change to:

  • 10 percent
  • 12 percent
  • 22 percent
  • 24 percent
  • 32 percent
  • 35 percent
  • 37 percent

In actual dollar ranges, the new brackets for those filing as individuals are as follows:

2018 Income Tax Rate: Single Individual

If taxable income is: The tax is:
Not over $9,525 10 percent of taxable income
Over $9,525 but not over $38,700 $952.50 plus 12 percent of the excess over $9,525
Over $38,700 but not over $82,500 $4,453.50 plus 22 percent of the excess over $38,700
Over $82,500 but not over $157,500 $14,089.50 plus 24 percent of the excess over $82,500
Over $157,500 but not over $200,000 $32,089.50 plus 32 percent of the excess over $157,500
Over $200,000 but not over $500,000 $45,689.50 plus 35 percent of the excess over $200,000
Over $500,000 $150,689.50 plus 37 percent of the excess over $500,000

2018 Income Tax Rate: Married Filing Jointly and Surviving Spouse

If taxable income is: The tax is:
Not over $19,050 10 percent of taxable income
10 percent of taxable income $1,905 plus 12 percent of the excess over $19,050
Over $77,400 but not over $165,000 $8,907 plus 22 percent of the excess over $77,400
Over $165,000 but not over $315,000 $28,179 plus 24 percent of the excess over $165,000
Over $315,000 but not over $400,000 $64,179 plus 32 percent of the excess over $315,000
Over $400,000 but not over $600,000 $91,379 plus 35 percent of the excess over $400,000
Over $600,000 $161,379 plus 37 percent of the excess over $600,000

2018 Income Tax Rate: Married Filing Separate

If taxable income is: The tax is:
Not over $9,525 10 percent of taxable income
Over $9,525 but not over $38,700 $952.50 plus 12 percent of the excess over $9,525
Over $38,700 but not over $82,500 $4,453.50 plus 22 percent of the excess over $38,700
Over $82,500 but not over $157,500 $14,089.50 plus 24 percent of the excess over $82,500
Over $157,500 but not over $200,000 $32,089.50 plus 32 percent of the excess over $157,500
Over $200,000 but not over $300,000 $45,689.50 plus 35 percent of the excess over $200,000
Over $300,000 $80,689.50 plus 37 percent of the excess over $300,000

2018 Income Tax Rate: Head of Household

If taxable income is: The tax is:
Not over $13,600 10 percent of taxable income
Over $13,600 but not over $51,800 $1,360 plus 12 percent of the excess over $13,600
Over $51,800 but not over $82,500 $5,944 plus 22 percent of the excess over $51,800
Over $82,500 but not over $157,500 $12,698 plus 24 percent of the excess over $82,500
Over $157,500 but not over $200,000 $30,698 plus 32 percent of the excess over $157,500
Over $200,000 but not over $500,000 $44,298 plus 35 percent of the excess over $200,000
Over $500,000 $149,298 plus 37 percent of the excess over $500,000

Changes in Corporate Income Tax Rate

In 2017, C corporations were subject to the following tax rates:

  • 15 percent for taxable income up to $50,000
  • 25 percent for taxable income over $50,000 to $75,000
  • 34 percent for taxable income over $75,000 to $10,000,000
  • 35 percent for taxable income over $10,000,000

With the passing of the TCJA, the corporate tax rate has now become a flat 21 percent, starting in the 2018 tax year. The corporate alternative minimum tax has also been eliminated.

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