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Finding Out Your Applicable Tax Brackets

Finding Out Your Applicable Tax Brackets

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Finding Out Your Applicable Tax Brackets
Income tax rates can generally be determined by placing an individuals overall income within a bracket, or a tax guideline. In fact, many employers help employees estimate what their income tax rate will be and take a percentage of those taxes out of  their paycheck throughout the year. This is done to avoid employees being confronted with an inability to pay for their income taxes at the end of the year.
The state of the economy often effects the federal governments influence over the income tax bracket. In 2010, the highest two income tax brackets are likely to be taxed at a higher rate than they currently are. For example, the tax rate for individuals that are in the highest bracket, likely have a current tax rate of thirty three percent. 
If the proposed changes take effect, that rate will change to thirty six percent. An individual can determine their income tax bracket after they have taken their allowed personal deductions, such as medical deductions. The list of allowable deductions is fairly long and each deduction will vary according to individual circumstances. In order to take deductions, taxpayers often need proof of those expenses.
Each state has income tax brackets and those brackets are determined according to each states individual income tax laws. In some states, there is a flat percentage charged to all tax payers. For example, a state may charge each employed tax payer a flat rate of three percent income tax. In other states, employed taxpayers pay a percentage of income towards income tax, based on the amount of their salary. 
Those states will not charge an individual income tax if they make a salary that falls below a certain threshold. Employed taxpayers that make a salary above a certain threshold, generally pay the highest percentage of their income toward income taxes. The federal income tax bracket includes a prescribed dollar amount of taxes based on an individuals overall income.
Tax brackets are helpful for taxpayers that wish to estimate what their income taxes will be in any given year. If a taxpayers salary falls within a certain range, they know that they will be responsible for a certain percentage of income taxes. Taxpayers can also determine how much money will be saved by utilizing specific deductions. 
Tax brackets generally require individual taxpayers to pay ten to thirty five percent of their income towards income taxes. Based on the income tax bracket, employers estimate what each employee's estimated income tax responsibility will be in any given year. Tax brackets are helpful for individuals to make determinations about an estimated income tax responsibility so that they can avoid defaulting on their responsibility.

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