Federal Income Taxes
Americans have been dealing with a federal income tax system since 1913, when the 16th Amendment was added to our constitution. Every year since then, new rules, tax rates, and deductions have challenged Americans' ability to pay the lowest possible amount of tax.
This is particularly true in view of the multi-year tax changes, with phase-ins and phaseouts, as provided under recent tax law changes.
What makes it even tougher is that normal life changes also affect your taxes. If in the last year, you got married or divorced, adopted or had a child, paid off a mortgage, opened a home business, or simply got a raise — the number of exemptions claimed, your filing status, and deductions you are allowed to take may also change.
Your filing status determines which tax rate schedule you use, and the amount of income made during the year determines your tax rate. If you think of the six tax rates as layers, you would pay zero on the bottom layer, 10% on the next layer, and so forth. The highest layer (or rate)
that your income reaches is known as your marginal rate.
Tax Rate Reduction
The Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA) accelerated rate reductions called for in the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA). Through 2010, the rates are 10%, 15%, 25%, 28%, 33%, and 35%.
To determine your tax level, click on the appropriate filing status below:
