You pay too much in taxes not to read this.
The U.S. uses a progressive income tax system. That means higher income tax rates generally apply to people with higher incomes. Keep in mind we’re talking about taxable income (income after allowed deductions) not gross income (the amount you get paid). Go online to find the new (as of Jan. 2019) brackets for married and single filers.
“Being ‘in’ a tax bracket,” notes NerdWallet, “doesn’t mean you pay that federal income tax rate on everything you make.” Here are a couple of examples:
A single (unmarried) federal income tax filer with $32,000 in taxable income. That person is in the 12 percent tax bracket but wouldn’t actually pay 12 percent of the full $32,000. Instead, s/he will pay 10 percent on the first $9,525 and 12 percent on the rest.
An individual with $50,000 in taxable income will pay 10 percent on the first $9,525, 12 percent on the chunk of income between $9,526 and $38,700 and 22 percent on the rest.
There are seven tax brackets, from 10 percent to 37 percent of taxable income. So, why is this important? Because it’s your money. Knowing this stuff will make you smarter about your money and where it goes. And, while it won’t take away all the pain, knowing things like your income tax bracket will make writing the check to Uncle Sam on April 15th a little less painful. Not!
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