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State and Local Taxation, Tax Law, Test 1 State Tax, Tax Form

State and Local Taxation, Tax Law, Test 1 State Tax, Tax Form

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I want to explain to you how tax brackets work in the USA so let's say that you make $100,000 a year this pile of money represents $100,000 so let's get this organized by tax brackets so you're looking at a total of $100,000 in the first pile of money is $111,000 in the second pile $ 33,785 thirdd pile $50,605 $4,625 the reason why I'm showing you this $100,000 organized into these four piles is because that's how tax brackets work so you see the first $111,000 that you make will be taxed at 10% the next $33,750 that you make will be taxed at a rate of 12% the next $50,605 of 22% the next $4,625 that you make will be taxed at a rate of 24% so in this example if you have $100,000 of taxable income you're going to pay total taxes of $177,400 so your effective tax rate is 17.4% that's $177,400 in taxes divided by $100,000 of taxable income so this is how tax brackets work a lot of people incorrectly believe that if you make $100,000

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