Tuesday, December 2, 2014

Taxes marginal tax rate

A taxpayer’s marginal tax rate is determined after total income and adjustments to that income are calculated. The marginal rate is essentially the amount of tax paid on an additional dollar of income, so the marginal tax rate for any individual will increase as his or her income rises. This method of taxation aims to fairly tax based on an individual's earnings, with lower income earners to be taxed at a lower rate than higher income earners.
Taxable income can be calculated by starting with the Gross Income. Subtract Adjustments from it and you have Adjusted Gross Income also referred as AGI. After deducting Standard or Itemized Deductions and Exemptions, your result is Taxable Income.
After taxable income is determined, the taxpayer needs to refer to the tax tables by filing status (single, married filing jointly, married filing separately, and single head of household) that are set each year by the IRS.

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