Income tax brackets
It is very important for the individual to maintain the records perfectly and organize all his savings and investments to reduce his tax to the maximum. Tax bracket differs from country to country as the tax system differs from country to country. Before deciding the bracket we must find what classification the individual falls in to. There are two types of income the ordinary income and the capital gain. Ordinary income includes the salary wages etc. Capital gains include the sale of a particular property or other such profits. The short term gains are treated like ordinary income but there are preferential rates for the Long term capital gains.Based on these objects of taxation, the tax bracket is as follows for United States of America:
If the person is filling as a single then the rates would be as follows:
10%-$0-$7825
15%-$7826-$31850
25%$31851-$77100
28%$77101-$160850
33%$160851-349700
35% $349700 and above
If the person is filling as married jointly or a qualified widower If the person is married but filling separate
10%-$0-$15650 10%$0-$7825
15%-$15651-$63700 15%-$7,826-$31,850
25%-$63701-$128500 25%-$31,851-$64,250
28%-$128501-$195,850 28%-$64251-$97,925
33%-$195,851-$349700 33%-$97,925-$174,850
35%- $349700 and above 35%- $174851 and above
If the person is the Head of Household
10%$0 $11,200
15%$11,201 $42,650
25%$42,651 $110,100
28%$110,101 $178,350
33%$178,351 $349700
35%$ 349700 and above
The same way there are some rate in % for the capital gain for both short term
and long terms. The same way if there are any deductions then the reductions is
made in the tax bracket he appears
In case United Kingdom
For Example take in case of United Kingdom;
Tax Bracket for the year 2006-2007 is:
From 1 Pound to 2,230 pounds tax rate is 10%( starting rate )
From 2231 pound to 34600 pounds the rate is 22%(Basic rate)
Over 34600 Pounds the rate 40%( Higher rate)
These rates are charged on the taxable income. The Taxable income is apart from the investments that he or she makes on some charity or donation or allowances. Usually the UK income tax is lower than the other western countries. All the citizen of this country will fall in one of these categories or the tax bracket. Some cases are even there where the employer's Tax is deducted by the company itself. The Payee system is common in U.K. it means pay as you earn. Here the employer deducts the tax and the worker's contribution to National Insurance.
The Indian Tax bracket for an individual has three categories; For women , senior citizen and men. Income up to 1, 10,000 for men and 145,000 for women and 195,000 for senior citizens is not taxable. Then till 10, 00 000 it is 10% 20% and 30%. 30% is the maximum and it also adds a surcharge of 10%. This is for individual who has income above 10, 00 000.
These are the Tax brackets for these countries and others also have some tax brackets within which an individual contribute to a country. Paying tax is for the benefit of the people who live in the country. It is responsibility of a citizen at the same time he has to make investments to reduce his tax.
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