Question:
What does it mean to be in a tax bracket of '25'?
curve516
2006-03-13 13:25:08 UTC
What does it mean to be in a tax bracket of '25'?
Three answers:
jen
2006-03-14 08:08:58 UTC
It means that the income that is left after taking your deduction (standard or itemized) and exemptions is taxed at 25% ( you are then paying 25 cents on every dollar that is left)
TaxGuru
2006-03-13 14:05:33 UTC
If you are in the 25% tax bracket, that means your last dollar of income is taxed at 25%.



Taxable income is equal to gross income minus deductions and exemptions. So, if your taxable income is zero or less, you don't pay any tax. If you have gross income in excess of your deductions and personal exemptions, then the first dollars above that amount are taxed at 10% - in the 10% bracket.



For 2005, the 25% bracket (for single taxpayers) consists of taxable income between $29,700 and $71,950. The amount of your taxable income that is more than $29,700 but not more than $71,950 is taxed at 25%. As long as your taxable income stays under $71,950, the next dollar of income will also be taxed at 25%. Income over $71,950 will be taxed at a higher rate -- either 28%, 33%, or 35%. The 35% bracket applies to taxable income in excess of $326,450! May we all be so fortunate as to pay tax at the highest rate!
Dona Lanterman
2016-05-10 19:23:47 UTC
What income does it cover


This content was originally posted on Y! Answers, a Q&A website that shut down in 2021.
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