Read about federal tax brackets
The rate of taxation is applied only to your taxable income. The 10% rate applies to income from $1 to $10,000; the 20% rate applies to income from $10,001 to $20,000; and the 30% rate applies to all income above $20,000. You should know that there are six federal tax brackets. The Tax Relief Act of 2010 temporarily extends the existing tax rate structure for two more years. Individuals currently pay a lower rate of tax on capital gains and certain corporate dividends. Together these constitute a zero percent tax bracket, in the sense that there’s no tax imposed the income represented by these deductible expenses. The scheme is still good, for consolation.
Categorised as: General