Tax Rate Schedules

The tax rate schedules below are provided to help you determine your marginal tax bracket at the federal and state level.  Locate your taxable income in the appropriate tax filing (single, joint, etc.) to estimate which marginal tax bracket you are in.

It is important to know your marginal tax bracket to understand the tax consequences of additional income.  For example, if your spouse and you earn $250,000 from your jobs and have $40,000 of various deductions, your taxable income would be $210,000.  As a “married filing jointly” couple in North Carolina, you would be in the 28% tax bracket at the federal level and 5.75% at the state level, for a combined tax rate of 33.75%.  That means that any additional income would be taxed at 33.75%. 

Additional taxable income may come from interest from bank accounts and/or dividends and capital gains from taxable investments.  In this scenario, if you earned an additional $5,000 in interest and dividends, your additional tax liability would be approximately $1,687 ($5,000 * 33.75%) leaving you really with $3,313.  With this knowledge, a few questions arise:

  • What is the rate difference that a taxable money market is paying and a tax-exempt money market?
  • Does it make sense to invest in a tax-exempt money market fund for my savings?
  • Is my investment strategy and the investments in my taxable account appropriate?
  • Can I shelter any more income?

Tax efficient investing is important to not only reduce your current tax liabilities, but to manage your future tax liabilities as well.  It also helps generate better after-tax returns.

2016 Taxable Income Brackets & Rates

Federal

Rate

Single

Married Filing Jointly

Head of Household

10%

$0 - $9,275

$0 – $18,550

$0 - $13,250

15%

$9,275 - $37,650

$18,550 - $75,300

$13,250 - $50,400

25%

$37,650 - $91,150

$75,300 - $151,900

$50,400 - $130,150

28%

$91,150 - $190,150

$151,900 - $231,450

$130,150 - $210,800

33%

$190,150 - $413,350

$231,450 - $413,350

$210,800 - $413,350

35%

$413,350 - $415,050

$413,350 - $466,950

$413,350 - $441,000

39.6%

$415,050 +

$466,950 +

$441,000 +

North Carolina

5.75% on taxable income.