U.S.

PERSONAL TAX SCHEDULES

FOR SINGLE TAXPAYERS--2004
Taxable income
Over
$0
$7,150
$29,050
$70,350
$146,750
$319,100

But not
over
$7,150
$29,050
$70,350
$146,750
$319,100

Tax rate
10%
15%
25%
28%
33%
35%

On amount
over
$0
$7,150
$29,050
$70,350
$146,750
$319,100

U.S. FEDERAL INCOME TAX SCHEDULES FOR

SINGLE INDIVIDUALS, 2004
Taxable income

2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20

Over
$
$
$
$
$
$

7,150.00
29,050.00
70,350.00
146,750.00
319,100.00

But not over

$ 7,150.00
$ 29,050.00
$ 70,350.00
$ 146,750.00
$ 319,100.00

Your income

32,000

Tax computation
Tax on first $7,150
Tax on income to $29,050
Tax on income over $29,050
Total tax

$
$
$
$

715
3,285
738
4,738

Average tax rate

Marginal tax rate

Tax rate on
bracket
10%
15%
25%
28%
33%
35%

<-- =10%*7150
<-- =15%*(29050-7150)
<-- =25%*(B11-29050)
<-- =B14+B15+B16

14.80% <-- =B17/B11

25%

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17

HOW MUCH WOULD YOU PAY IN TAXES?

Single taxpayer, living in Philadelphia, PA
Income
Philadelphia wage tax
Pennsylvania state income tax
Total state and local taxes
Income liable for federal taxes
Federal income tax
Tax on first $7,150 (10%)
Tax on income to $29,050 (15%)
Tax on income over $29,050 (25%)
Tax on income over $70,350 (28%)
Tax on income over $146,750 (33%)
Tax on income over $319,100 (35%)

$
$
$
$
$

Total federal taxes

Total income taxes paid
Average tax rate

$
$

$
$
$
$
$
$

32,000
1,428
896
2,324
29,676

<-- =4.4625%*B2
<-- =2.8%*B2
<-- =B4+B3
<-- =B2-B5

715 <-- =10%*7150

3,285 <-- =15%*(29050-7150)
157 <-- =25%*(B6-29050)
4,157 <-- =SUM(B8:B13)
6,481 <-- =B15+B5
20.25% <-- =B16/B2

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17

HOW MUCH WOULD YOU PAY IN TAXES?

Single taxpayer, living in Philadelphia, PA
Income
Philadelphia wage tax
Pennsylvania state income tax
Total state and local taxes
Income liable for federal taxes
Federal income tax
Tax on first $7,150 (10%)
Tax on income to $29,050 (15%)
Tax on income over $29,050 (25%)
Tax on income over $70,350 (28%)
Tax on income over $146,750 (33%)
Tax on income over $319,100 (35%)

$
$
$
$
$

100,000
4,463
2,800
7,263
92,738

$
$
$
$
$
$

715
3,285
10,325
6,269
-

Total federal taxes

Total income taxes paid
Average tax rate

$
$

20,594 <-- =SUM(B8:B13)

27,856 <-- =B15+B5
27.86% <-- =B16/B2

<-- =4.4625%*B2
<-- =2.8%*B2
<-- =B4+B3
<-- =B2-B5
<-- =10%*7150
<-- =15%*(29050-7150)
<-- =25%*(70350-29050)
<-- =28%*(B6-70350)

Single Taxpayer
Taxable income

3
Over
$
$
$
$
$
$

But not over

$ 7,150.00
$ 29,050.00
$ 70,350.00
$ 146,750.00
$ 319,100.00

Tax rate on
current bracket
10%
15%
25%
28%
33%
35%

$32,000
$
$
$
$
$

715
3,285
2,950
738
4,738

<-- =C5*B5
<-- =C6*(B6-B5)
<-- =B12-B6
<-- =C7*B16
<-- =B14+B15+B17

Married Individuals Filing Jointly

Taxable income
Over
$
$
$
$
$
$

14,300
58,100
117,250
178,650
319,100

Income
Tax computation
Tax on first $14,300
Tax on income over $14,300
Total tax

Tax rate on
current bracket
But not over
$
14,300
10%
$
58,100
15%
$
117,250
25%
$
178,650
28%
$
319,100
33%
35%
$32,000
$
$
$

1,430 <-- =C23*B23

2,655 <-- =C24*(B30-B23)
4,085 <-- =B32+B33

Married Individuals Filing Separately

Taxable income

37
38
39
40
41

7,150.00
29,050.00
70,350.00
146,750.00
319,100.00

Income
Tax computation
Tax on first $7,150
Tax on income to $29,050
Income over $29,050
Tax on income over $29,050
Total tax

21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36

U.S. FEDERAL INCOME TAX SCHEDULES FOR

4 KINDS OF FILERS, 2004

4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20

Over
$
$
$

Tax rate on
current bracket
But not over
$
7,150
10%
7,150 $
29,050
15%
29,050 $
58,625
25%

A
42
43
44
45
46
47
48
49
50
51
52
53
54

$
$
$

Income
Tax computation
Tax on first $7,150
Tax on income to $29,050
Income over $29,050
Tax on income over $29,050
Total tax

$
$

B
89,325
159,550

C
28%
33%
35%

$32,000
$
$
$
$
$

715
3,285
2,950
738
4,738

<-- =C39*B39
<-- =C40*(B40-B39)
<-- =B46-B40
<-- =C41*B50
<-- =B48+B49+B51

Heads of Households
Taxable income

55
56
57
58
59
60
61
62
63
64
65
66
67
68

58,625
89,325
159,550

Over
$
$
$
$
$
$

10,200
38,900
100,500
162,700
319,100

Income
Tax computation
Tax on first $10,200
Tax on income over $10,200
Total tax

Tax rate on
current bracket
But not over
$
10,200
10%
$
38,900
15%
$
100,500
25%
$
162,700
28%
$
319,100
33%
35%
$32,000
$
$
$

1,020 <-- =C57*B57

3,270 <-- =C58*(B64-B57)
4,290 <-- =B66+B67

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23

U.S. FEDERAL INCOME TAX SCHEDULES FOR CORPORATIONS 200

rates were applicable in 2000-2004
Taxable income over
$
$
$
$
$
$
$
$

50,000
75,000
100,000
335,000
10,000,000
15,000,000
18,333,333

Corporate income
Tax on first $50,000 (15%)
Tax on income over $50,000 less than $75,000 (25%)
Tax on income over $75,000 less than $100,000 (34%)
Tax on income over $100,000 less than $335,000 (39%)
Tax on income over $335,000 less than $10,000,000 (34%)
Tax on income over $10,000,000 less than $15,000,000 (35%)
Tax on income over $15,000,000 less than $18,333,333 (38%)
Tax on income over $18,333,333 (35%)
U.S. corporate income tax
Average corporate tax rate

Not over
$
50,000
$
75,000
$
100,000
$
335,000
$ 10,000,000
$ 15,000,000
$ 18,333,333

$
$
$
$
$
$
$
$
$
$

500,000
7,500
6,250
8,500
91,650
56,100
170,000
34%

HEDULES FOR CORPORATIONS 2004

plicable in 12000-2004
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23

Tax rate
15%
25%
34%
39%
34%
35%
38%
35%

<-- =15%*50000
<-- =25%*(75000-50000)
<-- =34%*(100000-75000)
<-- =39%*(335000-100000)
<-- =34%*(500000-335000)

<-- =B21/B12

Taxable income over

$
$
50,000
$
75,000
$
100,000
$
335,000
$
10,000,000
$
15,000,000
$
18,333,333

Corporate income
Corporate income tax
Average corporate
14 income tax rate
15
16
17

Not over
$
50,000
$
75,000
$
100,000
$
335,000
$ 10,000,000
$ 15,000,000
$ 18,333,333

$
$

Tax rate
15%
25%
34%
39%
34%
35%
38%
35%

$
$
$
$
$
$
$
$

Tax on
previous
brackets
7,500
13,750
22,250
113,900
3,400,000
5,150,000
6,416,667

500,000
170,000 <-- =VLOOKUP(B12,A3:D10,4)+VLOOKUP(B12,A3:D10,3)*(B12-VLOOKUP(B12
34.00% <-- =B13/B12

This is a data table: You will learn

to use them in Chapter 30
Average
corporate
income tax
rate
Corporate income

40%

$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$

15%

25,000
50,000
75,000
100,000
500,000
1,000,000
5,000,000
10,000,000
15,000,000
18,333,333
25,000,000
30,000,000
35,000,000
40,000,000
45,000,000
50,000,000

15.00%
15.00%
18.33%
22.25%
34.00%
34.00%
34.00%
34.00%
34.33%
35.00%
35.00%
35.00%
35.00%
35.00%
35.00%
35.00%

35%
30%
25%
20%

10%
5%
0%
$25,000

18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35

COMPUTING THE AVERAGE U.S. CORPORATE TAX RATE

these rates were applicable in 2000-2004

2
3
4
5
6
7
8
9
10
11
12
13

HE AVERAGE U.S. CORPORATE TAX RATE

rates were
1 applicable in 2000-2004

2
3
4 <-- =C3*A4
5 <-- =D4+C4*(A5-A4)
6 <-- =D5+C5*(A6-A5)
7
8
9
10
11
12
KUP(B12,A3:D10,4)+VLOOKUP(B12,A3:D10,3)*(B12-VLOOKUP(B12,A3:D10,1))
13
14
15
16

Average Corporate Tax Rate

17

$50,000,000

$45,000,000

$40,000,000

$35,000,000

$30,000,000

Corporate income

$25,000,000

$18,333,333

$15,000,000

$10,000,000

$5,000,000

$1,000,000

$500,000

$100,000

$75,000

$50,000

$25,000

18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35

SINGLE TAXATION: INDIVIDUAL EARNS $500,000 FROM BUSINESS

PAYS TAXES AS SOLE PROPRIETORSHIP
Taxable income

2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22

Over
$
$
$
$
$
$

7,150.00
29,050.00
70,350.00
146,750.00
319,100.00

But not over

$ 7,150.00
$ 29,050.00
$ 70,350.00
$ 146,750.00
$ 319,100.00

Your income

500,000

Tax computation
Tax on first $7,150 (10%)
Tax on income to $29,050 (15%)
Tax on income to $70,350 (25%)
Tax on income to $146,750 (28%)
Tax on income to $319,100 (33%)
Tax on income over $319,100 (35%)
Total tax

$
$
$
$
$
$
$

715
3,285
10,325
21,392
56,876
63,315
155,908

Net income after taxes

$ 344,093

S $500,000 FROM BUSINESS

OPRIETORSHIP
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22

Tax rate on
bracket
10%
15%
25%
28%
33%
35%

<-- =10%*7150
<-- =15%*(29050-7150)
<-- =25%*(70350-29050)
<-- =28%*(146750-70350)
<-- =33%*(319100-146750)
<-- =35%*(B11-319100)
<-- =SUM(B14:B19)

<-- =B11-B20

DOUBLE TAXATION: FIRST CORPORATE INCOME TAX THEN

PERSONAL TAXES

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27

Corporate tax
Taxable income over
$
$
$
$
$
$
$
$

50,000
75,000
100,000
335,000
10,000,000
15,000,000
18,333,333

Not over
$
50,000
$
75,000
$
100,000
$
335,000
$ 10,000,000
$ 15,000,000
$ 18,333,333

Corporate income

$ 500,000

Tax on first $50,000 (15%)

Tax on income over $50,000 less than $75,000 (25%)
Tax on income over $75,000 less than $100,000 (34%)
Tax on income over $100,000 less than $335,000 (39%)
Tax on income over $335,000 less than $10,000,000 (34%)
Tax on income over $10,000,000 less than $15,000,000 (35%)
Tax on income over $15,000,000 less than $18,333,333 (38%)
Tax on income over $18,333,333 (35%)
U.S. corporate income tax

$
$
$
$
$
$
$
$
$

7,500
6,250
8,500
91,650
56,100
170,000

Net after corporate tax

330,000

Personal tax
Taxable income

28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45

Over
$
$
$
$
$
$

7,150.00
29,050.00
70,350.00
146,750.00
319,100.00

But not over

$ 7,150.00
$ 29,050.00
$ 70,350.00
$ 146,750.00
$ 319,100.00

Your income

330,000

Tax computation
Tax on first $7,150 (10%)
Tax on income to $29,050 (15%)
Tax on income to $70,350 (25%)
Tax on income to $146,750 (28%)
Tax on income to $319,100 (33%)
Tax on income over $319,100 (35%)

$
$
$
$
$
$

715
3,285
10,325
21,392
56,876
3,815

A
46 Total tax
47
48 Total taxes paid
49 Net income after

all taxes

B
96,408

266,408

$ 233,593

RATE INCOME TAX THEN

XES
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26

Tax rate
15%
25%
34%
39%
34%
35%
38%
35%

<-- =15%*50000
<-- =25%*(75000-50000)
<-- =34%*(100000-75000)
<-- =39%*(335000-100000)
<-- =34%*(B13-335000)

<-- =SUM(B14:B21)
<-- =B13-B22

27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45

Tax rate on
bracket
10%
15%
25%
28%
33%
35%
<-- =B24

<-- =10%*7150
<-- =15%*(29050-7150)
<-- =25%*(70350-29050)
<-- =28%*(146750-70350)
<-- =33%*(319100-146750)
<-- =35%*(B37-319100)

C
46 <-- =SUM(B40:B45)
47
48 <-- =B22+B46
49 <-- =B13-B48

U.S. FEDERAL INCOME TAX SCHEDULES FOR

SINGLE INDIVIDUALS, 2004
Taxable income

2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20

Over
$
$
$
$
$
$

7,150.00
29,050.00
70,350.00
146,750.00
319,100.00

But not over

$ 7,150.00
$ 29,050.00
$ 70,350.00
$ 146,750.00
$ 319,100.00

Your income

32,000

Tax computation
Tax on first $7,150
Tax on income to $29,050
Tax on income over $29,050
Total tax

$
$
$
$

715
3,285
738
4,738

Average tax rate

Marginal tax rate

Tax rate on
bracket
10%
15%
25%
28%
33%
35%

<-- =10%*7150
<-- =15%*(29050-7150)
<-- =25%*(B11-29050)
<-- =SUM(B14:B16)

14.80% <-- =B17/B11

25%

USING EXCEL'S IF FUNCTION

do you get the youth airfare discount?

1
2 Your age
3 Your airfare from St. Louis to Chicago

25
200 <-- =IF(B2<23,75,200)

USING EXCEL'S IF FUNCTION

do you get the youth airfare discount?

1
2 Your age
3 Your airfare from St. Louis to Chicago
4
5 =IF(B2<23,75,200)
6
7
Is your age (cell B2) less than 23?
8
9
Age < 23, airfare = 75
10
Age > 23, airfare = 200
11

25
200 <-- =IF(B2<23,75,200)

U.S. FEDERAL INCOME TAX SCHEDULES FOR SINGLE INDIVIDUALS, 20

using Excel's IF function

Taxable income

2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20

Over
$
$
$
$
$
$

7,150.00
29,050.00
70,350.00
146,750.00
319,100.00

But not over

$ 7,150.00
$ 29,050.00
$ 70,350.00
$ 146,750.00
$ 319,100.00

Your income

32,000

Tax computation
Tax on income to $7,150
Tax on income between $7,150 and $29,050
Tax on income between $29,050 and $70,350
Tax on income between $70,350 and $146,750
Tax on income between $146,750 and $319,100
Tax on income over $319,100
Total tax

$
$
$
$
$
$
$

715
3,285
738
4,738

AX SCHEDULES FOR SINGLE INDIVIDUALS, 2004

sing Excel's
IF function
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20

Tax rate on
bracket
10%
15%
25%
28%
33%
35%

<-- =IF($B$11<A4,0,IF($B$11>B4,(B4-A4)*C4,($B$11-A4)*C4))
<-- =IF($B$11<A5,0,IF($B$11>B5,(B5-A5)*C5,($B$11-A5)*C5))
<-- =IF($B$11<A6,0,IF($B$11>B6,(B6-A6)*C6,($B$11-A6)*C6))
<-- =IF($B$11<A7,0,IF($B$11>B7,(B7-A7)*C7,($B$11-A7)*C7))
<-- =IF($B$11<A8,0,IF($B$11>B8,(B8-A8)*C8,($B$11-A8)*C8))
<-- =IF($B$11<A9,0,($B$11-A9)*C9)

U.S. FEDERAL INCOME TAX SCHEDULES FOR SINGLE INDIVIDUALS, 20

using Excel's IF function

Taxable income

2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20

Over
$
$
$
$
$
$

7,150.00
29,050.00
70,350.00
146,750.00
319,100.00

But not over

$ 7,150.00
$ 29,050.00
$ 70,350.00
$ 146,750.00
$ 319,100.00

Your income

100,000

Tax computation
Tax on income to $7,150
Tax on income between $7,150 and $29,050
Tax on income between $29,050 and $70,350
Tax on income between $70,350 and $146,750
Tax on income between $146,750 and $319,100
Tax on income over $319,100
Total tax

$
$
$
$
$
$
$

715
3,285
10,325
8,302
22,627

AX SCHEDULES FOR SINGLE INDIVIDUALS, 2004

sing Excel's
IF function
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20

Tax rate on
bracket
10%
15%
25%
28%
33%
35%

<-- =IF($B$11<A4,0,IF($B$11>B4,(B4-A4)*C4,($B$11-A4)*C4))
<-- =IF($B$11<A5,0,IF($B$11>B5,(B5-A5)*C5,($B$11-A5)*C5))
<-- =IF($B$11<A6,0,IF($B$11>B6,(B6-A6)*C6,($B$11-A6)*C6))
<-- =IF($B$11<A7,0,IF($B$11>B7,(B7-A7)*C7,($B$11-A7)*C7))
<-- =IF($B$11<A8,0,IF($B$11>B8,(B8-A8)*C8,($B$11-A8)*C8))
<-- =IF($B$11<A9,0,($B$11-A9)*C9)

THE LOGIC OF TWO IF STATEMENTS IN THE COMPUTATION OF INC

First If statement
Is income (cell B11) less
than the column A cutoff?

Yes

The tax on this bracket is $0

No

Second If statement
Is income (cell B11) greater
than the column B cutoff?

Yes

No

=IF($B$11<A4,0,IF($B$11>B4,(B4-A4)*C4,($B$11-A4)*C4))

S IN THE COMPUTATION OF INCOME TAX

The tax on this bracket is

the tax rate (column C) * total bracket
example: (B4-A4)*C4
The tax on this bracket is
the tax rate (column C) * (taxable income - lower end of bracket)
example: (B11-A4)*C4

A
1
2

3
4
5
6
7
8
9
10
11
12
13
14
15
16
17

U.S. FEDERAL INCOME TAX SCHEDULES FOR SINGLE INDIVIDUALS,

Tax

Taxable income
Over
But not over
$
$ 7,150.00
$ 7,150.00 $ 29,050.00
$ 29,050.00 $ 70,350.00
$ 70,350.00 $ 146,750.00
$ 146,750.00 $ 319,100.00
$ 319,100.00
Income
Tax

$
$

Tax rate on
current
bracket
10%
15%
25%
28%
33%
35%

Tax on
previous
brackets
$
$
715.00
$ 4,000.00
$ 14,325.00
$ 35,717.00
$ 92,592.50

32,000
4,738 <-- =VLOOKUP(B11,A4:D9,4)+VLOOKUP(B11,A4:C9,3)*(B11-VLOOKUP(B11,A4:C9,1))

Explanations
4,000 <-- =VLOOKUP(B11,A4:D9,4)
0.25 <-- =VLOOKUP(B11,A4:C9,3)
2,950 <-- =(B11-VLOOKUP(B11,A4:C9,1))

COME TAX1 SCHEDULES FOR SINGLE INDIVIDUALS, 2004

2

3
4
5 <-- =C4*A5
6 <-- =D5+C5*(A6-A5)
7 <-- =D6+C6*(A7-A6)
8
9
10
11
KUP(B11,A4:D9,4)+VLOOKUP(B11,A4:C9,3)*(B11-VLOOKUP(B11,A4:C9,1))
12
13
14
KUP(B11,A4:D9,4)
15
KUP(B11,A4:C9,3)
16
VLOOKUP(B11,A4:C9,1))
17

A
1
2

3
4
5
6
7
8
9
10
11
12
13
14
15
16
17

U.S. FEDERAL INCOME TAX SCHEDULES FOR SINGLE INDIVIDUALS,

Tax

Taxable income
Over
But not over
$
$ 7,150.00
$ 7,150.00 $ 29,050.00
$ 29,050.00 $ 70,350.00
$ 70,350.00 $ 146,750.00
$ 146,750.00 $ 319,100.00
$ 319,100.00
Income
Tax

$
$

Tax rate on
current
bracket
10%
15%
25%
28%
33%
35%

Tax on
previous
brackets
$
$
715.00
$ 4,000.00
$ 14,325.00
$ 35,717.00
$ 92,592.50

175,000
45,040 <-- =VLOOKUP(B11,A4:D9,4)+VLOOKUP(B11,A4:C9,3)*(B11-VLOOKUP(B11,A4:C9,1))

Explanations
35,717 <-- =VLOOKUP(B11,A4:D9,4)
0.33 <-- =VLOOKUP(B11,A4:C9,3)
28,250 <-- =(B11-VLOOKUP(B11,A4:C9,1))

COME TAX1 SCHEDULES FOR SINGLE INDIVIDUALS, 2004

2

3
4
5 <-- =C4*A5
6 <-- =D5+C5*(A6-A5)
7 <-- =D6+C6*(A7-A6)
8
9
10
11
KUP(B11,A4:D9,4)+VLOOKUP(B11,A4:C9,3)*(B11-VLOOKUP(B11,A4:C9,1))
12
13
14
KUP(B11,A4:D9,4)
15
KUP(B11,A4:C9,3)
16
VLOOKUP(B11,A4:C9,1))
17