What income taxes do I pay?
What income taxes do I pay?
The income taxes that you pay depend on your taxable income and your tax rate. Your taxable income is your total income minus any deductions and exemptions that you are eligible to claim. Your tax rate is based on your income level and the tax laws that apply to you.
In the United States, the federal government has a progressive income tax system, which means that taxpayers with higher incomes are taxed at a higher rate. The federal income tax rate for individuals is graduated, with different rates applying to different levels of income. For example, in 2021, the tax rates for single filers are as follows**:
- 10% on taxable income up to $9,950
- 12% on taxable income of $9,951 to $40,525
- 22% on taxable income of $40,526 to $86,375
- 24% on taxable income of $86,376 to $164,925
- 32% on taxable income of $164,926 to $209,425
- 35% on taxable income of $209,426 to $523,600
- 37% on taxable income above $523,600
In addition to federal income taxes, you may also be required to pay state and local income taxes, depending on the jurisdiction in which you reside. Some states and localities do not have an income tax, while others have a flat income tax rate that applies to all taxpayers.
It is important to note that there are many deductions and exemptions that you may be eligible to claim, which can reduce your taxable income and lower your tax liability. It is advisable to consult with a tax professional or use tax preparation software to help you determine the income taxes that you owe.
Prominent Financial Consultants offers a range of services to help our clients succeed, and we would love the opportunity to discuss how we can help you. If you would like to schedule an appointment with us, please schedule a free 15 Minute Financial Clarity Call so that we can learn more about your needs and goals.
**Tax rate valid as of Dec. 01, 2022. Subject to change.