1、CRS INSIGHT Prepared for Members and Committees of Congress INSIGHTINSIGHTi i The Federal Income Tax: How Do Marginal Income Tax Rates Work in 2020? Updated November 9, 2020 Calculating Income Tax Liability For many taxpayers, calculating their federal income tax liability can be broken down into th
2、ree main steps. 1. Taxpayers calculate the amount of their income subject to taxation (i.e., their taxable income). 2. Taxpayers apply marginal income tax rates to their taxable income to determine their “pre-tax credit” income tax liability. 3. Taxpayers subtract any tax credits from their pre-tax
3、credit income tax liability to determine their final income tax liability. This Insight looks only at statutory marginal tax rates and not effective marginal tax rates, which may differ. Effective marginal tax rates are the amount paid in tax on the next dollar of income, taking into account interac
4、tions with other features of the tax system. Thus, effective marginal tax rates are a function of (1) a taxpayers statutory tax marginal tax rate and (2) interactions with other credits, deductions, exemptions, and special provisions in the tax code. Some taxpayers with more complex tax situations,
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