ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

Personal Income Taxes Before 2018 Tax Changes

Updated on September 27, 2018
MNSteveG profile image

I work in the medical imaging field, but I've also always had a passion for saving money and finance throughout my life.

Lets take a look at our Personal Income Taxes a little Closer

You may be one of those people that simply fills out your W-4 (your tax withholding form) when you start your new job and then forget about it. This to me is a big mistake. Your income changes annually and there are many different life events that will affect your tax situation. I can only comment on situations for which I myself have encountered, which is single filing and married joint filing of taxes. I have no experience with and can't offer any advice on business taxes or self-employment. I have read many books in the Rich Dad Poor Dad series however that do clearly show there are large tax advantages to having a business and doing things financially through your business since they are taxed differently. The one thing that stuck out to me was the fact that businesses are taxed after expenses are taken out. For an everyday family that would be like being taxed on only the money you have left after paying for your home, food, utilities, etc. Wouldn't that be great?

Lets take a look at our current federal tax brackets for 2017. Keep in mind these are called "Marginal Tax Rates". This doesn't mean that if your total income falls in the 25% tax rate category that every dollar is taxed at 25%. If you need information on the upper brackets of 35% and 39.6%, you can find that on where I got all of these numbers. Its also a great website to search for the best credit card offers, but that is a whole other topic.

Single filers

Tax Rate Taxable Income Bracket Tax Owed
10% $0 - $9325 10% of income

25% $37,950 - $91,900 $5226.25 plus 25% of income over $37,950

28% $91,900 - $191,650 $18,713.75 plus 28% of income over $91,900

33% $191,650 - $416,700 $46,643.75 plus 33% of income over $191,900

Married Filing Jointly / Qualifying Widow(er)

Tax Rate Taxable Income Bracket Tax Owed
10% $0 - $18650 10% of income

15% $18,651 - $75,900 $1865 plus 15% of income over $18,650

25% $75,900 - $153,100 $10,452.50 plus 25% of income over $75,900

28% $153,101 - $233,350 $29,752.50 plus 28% of income over $153,100

33% $233,350 - $416,700 $52,222.50 plus 33% of income over $233,350

I like these brackets, because they break it down for you on the right side showing the tax owed. For example lets say you make $150,000 as a married couples filing jointly. Your total tax owed before deductions and exemptions would be $10,452.50 + $18,525 =$28,977.50 ($150,000-$75,900 = $74,100), $74,100 x 0.25 = $18,525
There are a number of tax deductions, exemptions & credits that will affect your tax return. What we should all really be aiming for is for your taxes owed or tax return to be as close to zero as possible. This would mean you are getting paid every last dollar owed to you throughout the year instead of having the government hold your money all year in order to give it back to you in one large sum the following year. I know some people love having that big check every year, but think about what you could have done with it throughout the year instead that could have changed your financial situation.

I’m going to give a couple of relatively simple examples of tax situations. These will use the state of MN as that is the only state I’m familiar with income taxes for.

MN income tax brackets are as follows for 2017:

Married joint filing

Tax rate Taxable income bracket Tax owed
5.35% 0 - $37,110 5.35% of income

7.05% $37,111 - $147,450 $1985.39 + 7.05% of income over $37,110

7.85% $147,451 - $261,510 $9764.36 + 7.85% of income over $147,450

9.85% $261,511 and over. $18,718.07 + 9.85% of income over $261,510

MN single filing

Tax rate Taxable income bracket Tax owed
5.35% 0 - $25,390 5.35% of income

7.05% $25,391 - $83,400 $1358.37 + 7.05% of income over $25,390

7.85% $83,401 - $156,900 $5448.07 + 7.85% of income over $83,400

9.85% $156,901 and over $11,217.82 + 9.85% of income over $156,900

EXAMPLE #1 Married couple with 2 children filing jointly with income of $150,000

We’re going to just make some estimates for their numbers.
* Save 10% in 401k ($15,000)
* $5000 pretax dependent care account
* $2000 pretax flex spending account
* $6500 annually pretax for health insurance
* $600 annually pretax for dental insurance

Total pre-tax (tax exempt income) = $29,100
AGI (adjusted gross income) = $150,000 - $29,100 = $120,900

* Property Taxes of $4000
* Mortgage interest of $6750
* Charitable giving/donations of $1500
* Car tab taxes of $325
* MN tax paid (state income tax) some states don’t have income tax, instead use sales tax
In this example their state income tax should be $7692.58
($1985.39 + $5907.19 = $7892.58) - $200 marriage credit = $7692.58

Total Deductions = $20,267.58
Personal Exemptions = $4050 x 4 people = $16,200

Taxable Income = AGI - Exemptions and Deductions.
$120,900 - $20,267.58 - $16,200 = $84,432.42

Federal Tax: $84,432.42 - $75,900 = $8532.42 x 0.25 = $2133 + $10,452.50 = $12,585

This family's tax rate for the year would be $12,585/$120,900 = 10.41%

Their MN state tax rate for 2017 would be $7692.58/$120,900 = 6.37%

I personally round up and do a little extra percentage, just in case of any miscalculations or changes. I'd put 10.75% or 11% for whole number for federal and 6.6% for state or 7% if needs to be whole number.

*Some employers like my own allow you to put in a specific percentage you want taken out for each federal and state taxes. Others may have to be whole numbers. If they don't allow specific percentages, then you may need to play around with exemptions claimed on your W-4 and you can add additional dollar amounts to be taken out per pay period as well if you are not having enough taxes taken out of your checks.

EXAMPLE #2 Single person, renting home/apartment. (I won't get into rent paid refunds)
In this example the person makes $60,000

* Saves 10% in 401k ($6000)
* $500 Flex Spending Account
* $1100 Medical Insurance annually
* $150 Dental Insurance annually

Total Pre-Tax (tax exempt income) = $7750
AGI = $52,250

Standard Deduction of $6350 for single filer
$4050 personal exemption

Total Taxable Income = $52,250 - $6350 - $4050 = $41,850

Federal Tax: $41,850 - $37,950 = $3900 x 0.25 = $975 + $5226.25 = $6201.25

Their actual federal tax rate for the year would be $6201.25/$52,250 = 11.9%

MN State Tax: $52,250 - $25,391 = $26,860 x 0.0705 = $1893.63 + $1358.37 = $3252

Their actual MN state tax rate for the year would be $3252/$52,250 = 6.22%

In this case you may want to set your tax withholding to be 12% or 12.25% to be safe for federal and 6.3 or 6.5% for state to be safe and make sure you won't owe money at the end of the year. Again, if you are only allowed whole percentages, then just round up to the nearest percent so could still do 12% or 13% for federal and 7% for state.

This is my 3rd year of trying to fine tune our exact tax rate as close to optimal as possible. Using these calculations, I'm very confident we shouldn't receive a huge refund come tax season, but we also will not owe any additional tax.

I believe most people's taxes are relatively simple enough for you to do yourself. I've used, and H&R Block More Zero to file taxes in the past. Right now my preference is H&R Block. They are all easy to use and walk you through the entire process getting you as many deductions and credits based on how you answer certain questions. I've gone through the whole process using all of these websites in the same year and got the same numbers in the end, so there is no difference in outcome. This past tax season was when I first discovered HR Block More Zero and I thought it was too good to be true. I was able to e-file both our itemized federal return and state returns for FREE! The same thing would have cost me $50 through TaxAct. The H&R Block website wasn't as easy to use, but not too difficult either. Check it out yourself next tax season. You may be pleasantly surprised.

Here is just a simple and quick example of how having closer to your actual tax rate taken from your paychecks would benefit you more than getting a larger refund come tax time.Lets say you are going to receive a tax refund of $1000 for example. In this example the person may want to just use that to pay off a credit card debt with lets say an initial balance on it of $1000. So you make a one-time lump sum payment of $1000 on your credit card in February (which is likely the earliest you'd be receiving your refund). If you made the initial charge the January before that, its 12 months of interest accruing and we're assuming just minimum payments are made each month in this example. If you pay a $20 minimum each month over 12 months you would have accrued around $115 in interest before paying off your initial $1000 debt. If you planned your tax withholding's correctly, you would be able to put an additional $83 toward your debt each month reducing your debt to zero in 11 months, and only paying a total of about $57 in interest. That saves you half the amount in interest ($58) if you pay more each month vs. waiting until the "big refund" to make a large payment.

Thanks for reading and I hope this has been informative and helpful to you. Feel free to write me and questions or comments. Maybe you have a different method or have a suggestion to increase accuracy of my calculations.


    0 of 8192 characters used
    Post Comment

    No comments yet.


    This website uses cookies

    As a user in the EEA, your approval is needed on a few things. To provide a better website experience, uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

    For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at:

    Show Details
    HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
    LoginThis is necessary to sign in to the HubPages Service.
    Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
    AkismetThis is used to detect comment spam. (Privacy Policy)
    HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
    HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
    Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
    CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
    Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the or domains, for performance and efficiency reasons. (Privacy Policy)
    Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
    Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
    Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
    Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
    Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
    VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
    PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
    Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
    MavenThis supports the Maven widget and search functionality. (Privacy Policy)
    Google AdSenseThis is an ad network. (Privacy Policy)
    Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
    Index ExchangeThis is an ad network. (Privacy Policy)
    SovrnThis is an ad network. (Privacy Policy)
    Facebook AdsThis is an ad network. (Privacy Policy)
    Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
    AppNexusThis is an ad network. (Privacy Policy)
    OpenxThis is an ad network. (Privacy Policy)
    Rubicon ProjectThis is an ad network. (Privacy Policy)
    TripleLiftThis is an ad network. (Privacy Policy)
    Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
    Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
    Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
    Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
    ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
    Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)
    ClickscoThis is a data management platform studying reader behavior (Privacy Policy)