Each year, the federal government creates new tax brackets that are used for filing personal income taxes. These tax brackets are actually income ranges that are used to determine the amount that individual or joint income tax filers must pay. For the 2009 tax year, there are six tax brackets associated with personal income taxes. Each tax bracket is assigned to particular tax rate that ranges from 10% to 35%. The lowest income tax brackets will receive the 10% tax rate while the highest tax bracket receives the largest tax rate of 35%.
The income tax brackets are formed so that individuals who earn low wages pay the least in taxes, while individuals who earn the highest wages pay the most in taxes. This concept is often referred to as the progressive taxation system. It is considered progressive because the more money that you earn, the higher of a percentage will be taken out in taxes.
Individuals who earn an income between $0 and $8,350 fall into the first tax bracket which has a tax rate of 10%. A person who falls into the second income tax bracket (15%) would earn an income of $8,351 tot $33,950. The third tax bracket is taxed at a rate of 25% and includes individuals who earn between $33,951 and $82,250. The first three tax bracket cover the majority of single tax filers in the United States. From here, your taxes will increase to 28% if you earn between $82,250 and $171,500. The fifth bracket includes individuals who earn between $171,551 and $372,950. This bracket is taxed at the 33% rate. The sixth and final tax bracket is for individuals who earn more than $372,950 and it carries a 35% tax rate.
Author: Allen Dukes