Taxes can be tricky since income does not always fall within the same bracket. In order to truly understand taxes, you need to understand marginal and effective tax rates. Even then, your final take-home total is dependent not only on your federal tax, but also state tax, which varies from state to state. Also, there is FICA sales, and excise taxes. Overall, you will typically pay a lower percentage in taxes than which percentage tax bracket you fall into.
Key Takeaways:
- Calculating income tax alone doesn’t give the entire picture of money paid for taxes.
- State taxes are highly effected on the tax bracket which your income puts you in.
- The average tax rate people pay is based on their income and is a percentage that changes in brackets.
“However, calculating your income tax payments alone doesn’t give you a true picture of how much you’ll really pay in taxes this year.”
Read more: https://thecollegeinvestor.com/34072/effective-tax-rates/