Federal Tax: Percentage Paid As Opposed To Tax Bracket

An individual’s federal tax percentage is directly related to the tax bracket that they fall into.  The different tax brackets are separated according to income. The income includes all taxable income, not just income that is earned from an employer.

Bracket categories

Current income tax brackets range from 10% to 35%. There are dollar ranges set to figure out the percentage you will pay.  The IRS publishes the different tax brackets with the instructions for the 1040 and 1040-ES returns. There are different schedules for single, head of household, married filing jointly and married filing separately. The federal income tax withholding rate is listed clearly next to the income earned for the tax year.

Deductions and My Tax Bracket

The amount of deductions claimed can change your tax bracket. For example, if you made 70,000 for one year, but then you were able to take 40,000 in itemized deductions,  then your taxable income is now at around 30,000. In short, even though you earned 70,000 your tax bracket will be determined by the 30,000 taxable income.

Your taxable income is what decides your tax bracket and it can be affected by all earnings and deductions.

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