Every citizen, whether you’re an individual or a business entity need to pay income tax. Taxes are the government’s source of revenue which they can also use for the benefit of the people. There are many kinds of tax systems that are prevalent such as proportional, regressive and progressive. As a taxpayer, you need to calculate the amount of tax that you need to pay so that you will remain in the government’s good books.
Calculating income tax on salary: Calculating your income tax can be a difficult task. This is especially true if you’re not a major of accounting or any math course. However, if you are familiar with the tax slabs that are currently prevalent, then there is nothing to be worried about.
Tax deduction rates in the U.S. vary with every individual’s income. One other criterion in deciding the tax deductible for an individual is your marital status. There are many ways to file your income tax and this is through –
Married individual filing jointly
Head of the household
Married person filing separately
Sample rates for married couple (filing jointly) and qualified widow:
Ten-percent if the annual income is no more than $16,700.
If the income lies anywhere between $16,701 to $67,900 where the tax rate is at 15%.
Incomes in between $67,901 to $137,050 have a tax rate of 25%.
If the yearly income is somewhere between the amounts of $137,051 to $208,850 where the rate is 28%.
If the total yearly income goes beyond $208,851 but is lower than $372,950, the tax rate is at 33%.
If you earn more than $372,950 annually, then you will need to pay 35% of your yearly income.
Compare these rates to the tax rates that are given to single individuals –
Sample rates for single people:
Ten-percent if the yearly income is no more than $8,350.
If the income is anywhere from $8,351 to $33,950, then the tax rate is 15-percent.
For incomes that range from $33,951 to $82,250, the tax rate is 25%.
For incomes that range from $82,251 to $171,550, the tax rate is 28%.
If the individual’s total annual income goes beyond $171,551 but is below $372,950, the tax rate is at 33%.
If you are a single person earning more than $372,950 then you will need to pay 35% of your annual income.
These should give you an idea how income taxes are computed according to a person’s income bracket. Know where you belong and get to compute your income taxes without difficulty.