Federal Income Tax is collected by the federal government, most state governments and also by some lost governments.
Federal Income tax is a multi tier tax, this means there are a number of different tax levels or 'Tax Thresholds'. The amount of Federal Income Tax you have to pay is calculated on your Gross Pay. Circumstance Exemptions, Cafeteria, etc are then deducted from your Gross Pay to provide your Taxable Income.
Federal Income Tax is then applied and calculated against your Taxable Income. An example of the Federal Income Tax multi tier tax is shown below for an individual with annual Gross Pay of $150,000.00.
Individuals and corporations have to pay Federal Income Tax once earnings / profits exceed a specific tax threshold.
Federal Income Tax Rates are a series of percentage rates at which Federal Income Tax is applied dependent on the amount your earn. Federal Income Tax Rates and Earning Thresholds typically change annually.
Federal Income Tax pays for Public Services like:
Federal Income Tax was borne in 1861 aspart of the Revenue Act of 1861, conceived by congress, the first income tax was to fund the American civil War. Our forefathers had a bill for 3% of all earning over $800.00, I guess many of us would happily go back to that 'Golden Tax Era!'
You can calculate your Federal Income Tax payments here just by entering your Gross Pay!
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