chargirlgenius (![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png)
chargirlgenius) wrote2008-10-17 11:45 am
chargirlgenius) wrote2008-10-17 11:45 am
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Tax Bracket Clarification
Seems a lot of people don’t understand how tax brackets work. I completely understand. I didn’t understand until I researched it about 6 months ago. I’m reposting something that I just posted elsewhere, thought it was worth pointing out:
Here’s how tax brackets work.
2008 tax brackets:
$0 - $15,650: 10% of the amount over $0
$15,651 - $63,700: $1,565 plus 15% of the amount over $15,650
$63,701 - $128,500: $8,772.50 plus 25% of the amount over $63,700
$128,501 - $195,850: $24,972.50 plus 28% of the amount over $128,500
$195,851 - $349,700: $43,830.50 plus 33% of the amount over $195,850
$349,701 - No limit: $94,601 plus 35% of the amount over $349,700
What does this mean? This means that if I make more than the next guy, I’m not being taxed more on the same amount of money. I’m only being taxed more on the amount that I make above and beyond him. If Joe the bus driver and his wife make $63,700, and my hubby and I make $100k, we’re paying the exact same tax rate on that $63,700. I’m only paying a higher percentage on the last $36,300 of my income. That’s not even taking into account the fact that I can likely hire a better accountant with that additional income.
I’ll admit, I haven’t delved into the details of the small business changes, but I’m not a small business owner. But if it works out the same as regular tax brackets, the person making $251k will still be taxed exactly the same percentage on the first $250k of that. Only the 1k over and above 250k will be taxed an additional 3%.
Google how tax brackets work for more info.
Here’s how tax brackets work.
2008 tax brackets:
$0 - $15,650: 10% of the amount over $0
$15,651 - $63,700: $1,565 plus 15% of the amount over $15,650
$63,701 - $128,500: $8,772.50 plus 25% of the amount over $63,700
$128,501 - $195,850: $24,972.50 plus 28% of the amount over $128,500
$195,851 - $349,700: $43,830.50 plus 33% of the amount over $195,850
$349,701 - No limit: $94,601 plus 35% of the amount over $349,700
What does this mean? This means that if I make more than the next guy, I’m not being taxed more on the same amount of money. I’m only being taxed more on the amount that I make above and beyond him. If Joe the bus driver and his wife make $63,700, and my hubby and I make $100k, we’re paying the exact same tax rate on that $63,700. I’m only paying a higher percentage on the last $36,300 of my income. That’s not even taking into account the fact that I can likely hire a better accountant with that additional income.
I’ll admit, I haven’t delved into the details of the small business changes, but I’m not a small business owner. But if it works out the same as regular tax brackets, the person making $251k will still be taxed exactly the same percentage on the first $250k of that. Only the 1k over and above 250k will be taxed an additional 3%.
Google how tax brackets work for more info.
no subject
That's the thing with this "Joe the Plumber". Not that his situation is anything but hypothetical, but if he's pulling down $250k AFTER all of his business deductions, I'm not feeling very sorry for him.
no subject