XM -Blog

How Much Tax Do You Pay In The US?

October 2nd, 2017

The US Tax System

One of the most important aspects to consider, when you’re planning on moving to the US is your taxes. As the process can get a bit more complex for most expats, we thought we’d simplify this for you and explain how much tax you’d have to pay if you moved to the United States of America today. Bear in mind though, we can only cover the basics in a blog post, so if you need more information or if you want to make sure you’re taking advantage of all the opportunities to reduce your liability, consider speaking to a tax advisor.


First, you need to know about what the Internal Revenue Service, known as the IRS, refer to as deductions. This is the amount of tax- free income you can earn. The standard deduction is $6,350, although you can reduce your liability further if you opt for an itemised deduction which requires you to list out expenses such as medical bills or charitable donations.

Income tax rates

Here’s a breakdown of the different income tax brackets:

Rate Income bracket
10% $0 to $9,325
15% $9,325 to $37,950
25% $37,950 to $91,900
28% $91,900 to $191,650
33% $191,650 to $416,700
35% $416,700 to $418,400
39.60% $418,400+

You pay the rate in the left column on the income bracket in the right column. So you pay 10% on the first $9,325, then 15% on the next $28,625 (up to $37,950), 25% on the subsequent $53,950 (bringing you up to $91,900) and so on.

This is the federal income tax rate which means you pay it to the US government. However, most states charge their own income tax on top- you can find a list of them here.

Social security and Medicaid

You’re also subject to a payroll tax which funds social security and Medicare (collectively known as FICA after the Federal Insurance Contributions Act). Social security covers benefits such as unemployment and maternity leave, while Medicare goes towards health insurance. Generally, this tax comes to 7.65% (in addition to the income tax outlined above).

Tax return

Finally, you have to file your own tax return in the US. If it’s simple, you can complete it yourself. However, there are penalties if you make mistakes, so you may want to consider hiring a professional tax advisor. To find out more about submitting your return, visit the IRS website.