Here are your 2008 Federal Income Tax rates!

You can use this to determine your marginal tax rate and be reminded of just how much of your 2008 earnings will not go into your pocket. You can also calculate how much tax you’ll save if you increase your deductions! Once you see how much you can save then you may also be more inclined to start planning for your 2008 deductions now. You’ll want to ensure that you document every deduction that you can take throughout the year in order to maximize your return.

The published 2008 Federal Income Tax Rates are as follows:

Single Filing Status

• 10% on income between $0 and $8,025
• 15% on the income between $8,025 and $32,550; plus $802.50
• 25% on the income between $32,550 and $78,850; plus $4,481.25
• 28% on the income between $78,850 and $164,550; plus $16,056.25
• 33% on the income between $164,550 and $357,700; plus $40,052.25
• 35% on the income over $357,700; plus $103,791.75

Married Filing Jointly

• 10% on the income between $0 and $16,050
• 15% on the income between $16,050 and $65,100; plus $1,605.00
• 25% on the income between $65,100 and $131,450; plus $8,962.50
• 28% on the income between $131,450 and $200,300; plus $25,550.00
• 33% on the income between $200,300 and $357,700; plus $44,828.00
• 35% on the income over $357,700; plus $96,770.00

Married Filing Separately

• 10% on the income between $0 and $8,025
• 15% on the income between $8,025 and $32,550; plus $802.50
• 25% on the income between $32,550 and $65,725; plus $4,481.25
• 28% on the income between $65,725 and $100,150; plus $12,775.00
• 33% on the income between $100,150 and $178,850; plus $22,414.00
• 35% on the income over $178,850; plus $48,385.00

Head of Household

• 10% on the income between $0 and $11,450
• 15% on the income between $11,450 and $43,650; plus $1,145.00
• 25% on the income between $43,650 and $112,650; plus $5,975.00
• 28% on the income between $112,650 and $182,400; plus $23,225.00
• 33% on the income between $182,400 and $357,700; plus $42,755.00
• 35% on the income over $357,700; plus $100,604.00

Wow, I’m amazed every time I look at these schedules at just how much of my money goes to Uncle Sam! One thing to note is the marginal tax rate. This is the tax rate that you would pay on the last dollar you earn based on your filing status and the tax rates given above.

For example, if my wife and I earned a combined income of $100,000, and our filing status was Married Filing Jointly, then that gives us a marginal tax rate of 25%. In reality, we don’t pay 25% on all $100,000 that we earn. Instead our effective tax rate will actually be much lower than that. However, I will leave explaining the difference between these two definitions for a later date. . .

Since I determined that I am in the 25% tax bracket, I can guesstimate that for every $1 that I can deduct, I will save roughly 25 cents. This gives me good incentive to properly document my tax-deductible expenses such as the mileage I travel when driving for my business, or for that car load of items I dropped off at the Goodwill the other day. A car load of items dropped off at the Goodwill producing a deduction worth about $200 will save me about $50 off my taxes.

On top of the Federal Income Taxes you'll pay in 2008, you'll also pay a Medicare tax rate of 1.45% on your income and 6.2% to Social Security.

Stay strong soldier. Taxes and death are the only sure things in life.

The Money Kings

Keywords: 2008, federal income tax, marginal tax, tax bracket, deductions, finance