‘Merica and Income Taxes

Cot damn taxes! The one thing we can all agree on — nobody likes them. But, they are a necessary evil in life, like doing the dishes or watching an entire season of a show just because you’re too invested to stop now.

So, let’s talk about US tax rates. The federal government has a sliding scale of tax rates based on how much money you make. This is called a progressive tax rate system, which means that the more you make, the higher your tax rate is.

Your marginal tax rate is the tax rate applied to your last dollar of income. So, if you’re making $100,000 and your marginal tax rate is 32%, that means the last dollar you make is taxed at 32 cents.

Your effective tax rate, on the other hand, is the average tax rate you pay based on your total taxable income. So, if you made $100,000 and your effective tax rate was 22%, that means you paid $22,000 in taxes.

For the tax year 2021, the federal income tax rates for individuals are as follows:

• 10%: The government will take 10 cents of every dollar you make up to $9,950 (or $19,900 if you’re married and filing jointly).
• 12%: The next tier is 12 cents of every dollar you make from $9,951 to $40,525 (or $19,901 to $81,050 if you’re married and filing jointly).
• 22%: The government then takes 22 cents of every dollar you make from $40,526 to $86,375 (or $81,051 to $172,750 if you’re married and filing jointly).
• 24%: The government then takes 24 cents of every dollar you make from $86,376 to $164,925 (or $172,751 to $329,850 if you’re married and filing jointly).
• 32%: The government then takes 32 cents of every dollar you make from $164,926 to $209,425 (or $329,851 to $418,850 if you’re married and filing jointly).
• 35%: The government then takes 35 cents of every dollar you make from $209,426 to $523,600 (or $418,851 to $628,300 if you’re married and filing jointly).
• 37%: And finally, if you make more than $523,600 (or $628,300 if you’re married and filing jointly), the government will take 37 cents of every dollar you make.

So, there you go — the US tax rate breakdown. Just remember, taxes are like a necessary evil in life. But, hey, at least you’re contributing to the greater good. Or, you know, the government’s new billion dollar widget.

Hey there, I am soldier turned engineer turned data scientist turned financial advisor. If you ever have question about a financial topic or if you are in the market for a real good financial advisor, come check me out. linktr.ee/lampfinancial