How much is taxes

how much is taxes

Americans will pay an average of 20% of their income in federal taxes this year.

Nearly everyone hates paying taxes, but you may be kind of fuzzy on how much in total you ship off to Uncle Sam.

For example, you might know that you’re in the 25% tax bracket, but that doesn’t mean you hand over 25% of your pay—that’s a marginal rate that applies only to part of your income. You also have to subtract out deductions and credits, and then add in taxes that aren’t part of the income tax, like for Social Security. Fortunately, the Tax Policy Center has been doing the heavy lifting of keeping track of all this, and it’s just put out some new numbers.

On Monday, the nonpartisan research group released information on the 2015 tax year based on an update of the model they use to calculate what people pay. According to the Center’s data, Americans will pay an average of 19.8% of their income in taxes to the federal government. That number doesn’t include state taxes or

city taxes (we’ve got those in NYC.)

As you can see, most of your tax dollars come from income tax and payroll tax, with a little bit going to corporate tax. Why is an individual paying a tax that’s reserved for businesses? Well, Mitt Romney wasn’t totally wrong when he said corporations are people —at least for the purposes of tax policy. In the end, a corporate tax has to make a flesh-and-blood person somewhere less wealthy than they’d otherwise be. The center’s model takes into account the fact that even non-CEOs indirectly pay some corporate tax. partly in reduced wages but mostly through lower returns to investors and business owners. (Not surprisingly, people in higher brackets effectively pay more in corporate tax.)

While the average tax burden is 19.8% of your salary, most people actually pay less because that number is skewed by high earners. So the Tax Policy Center also breaks out the average federal tax burden by income bracket, so you can see how much of your income you’ll likely be shelling out this year.

Source: time.com

Category: Taxes

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