Tax Rates – Know How They Impact Your Taxes

What really impacts taxes are tax rates as the higher the tax rates, the higher are the taxes that you need to pay. There are different tax slabs which indicate how much taxes a person would need to pay. The rates for these taxes are divided across 6 different slabs.

The simplest case of tax calculation is regarding rates for the taxes is in the first slab. The first slab for single tax-payers is for people who have their annual salaries less than $7,500 per annum. The rates do not vary across different cross-section of tax-payers. The different cross-section of tax-payers are Qualified Widower, Married filing Separately and Household Head. For example, if a person earns $7,550 would need to pay 10% of the salary as income tax. Hence, he would need to pay $755 as his annual income tax. The tax rates across the six different slabs vary from 10% to 35%. It is more important for you to realize that an increase in pre-tax income does not mean that your after-tax income is reduced substantially. Converse to what people think, I have seen an increase in after tax income even with an increase in pre-tax income.

These tax rates have been a main point of discussion when elections happen across the country. With different taxes in vogue, a cross-section of people feel that the tax rates are relatively high. Especially, with the concept of Property Tax that you need to pay on the property which you own, and the taxes which people pay on their incomes have gone higher. Considering states like Texas have very high property tax rates, it really is causing a dent in people’s wallets considering the point that a lot of it is used in providing amenities to people.

In most of the states, people do need to pay federal income taxes as there are no income tax rates but that is quite compensated with a substantial increase in property tax rates. States like California are not entirely dependant on their property tax rates. They collect their taxes through Federal Income taxes and Sales Tax. With a lot of companies in existence across different states in the USA, governments also look at collecting Corporate Tax using their Corporate Tax Rates.

Regardless of your feelings about taxes, the objective of the federal government collecting taxes is not to burden people. Though the rates are high, we should understand that this is for providing a better life for the citizens. Though you may disagree with that statement, you will nevertheless still have to pay your taxes in accordance with the tax rates as decided by the government entities charged to do so.

Property Tax