Basics of US Income Tax Rate Schedule
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Basics of US Income Tax Rate Schedule

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What I want to do in this video is try to get a
good understanding of how the US Federal
income tax rates schedule works and also
what people mean when they say tax
brackets or what it means to be in a tax bracket
So let's say that I make a hundred thousand dollars
and I'm single and I'm not going to go into
the deductions or anything fancy like that
So let's say I make one hundred thousand
dollars in a given year
and these numbers will change as the tax
code changes but the general idea is the
same thing although the details might change
so the way the rate schedule works is that
the first eight thousand three hundred and
fifty (8350) of my 100 000 dollars will be
taxed at 10%. so the first 8350 dollars will be taxed at 10%.
so I'll be paying what thats pretty easy to calculate I'll be paying eighthundred and thirty-five dollars on that first
8350 dollars. now the next 25 600
or the next from 8350 to 33950 that will be taxed at 15% that will be taxed at 15%. s
so this amount right over here
i will have to pay 15% on that. so the difference between 33950 and 8350 is 25600. so 25600 times 15%.
i will calculate it all at the end using a calculator.
now the next 48300 dollars is going to be taxed at 25%
so let me draw that over here. so the next, this next slug over here is going to be taxed at 25%. this
is the difference between 82250 and 33950 that is 48300. so its going to be 48300 times 25%. and then
finally the remainder the amount above 82250 since I dont get into the next bracket above that this part
right here is going to be taxed at 28%. so this part right over here is going to be taxed at 28%. let
me get my trusty calculator out to figure out what that is so if that's going to be taxed at so the difference
between 100000 dollars and 82250. so 100, 100 thousand dollars minus eighty two fifty is 17750 so is
17750 times 28%. and now i can use the calculator to calculate all of these. so its going to
be lets do it all at once.
17750 times 28%. ill say that as point two eight percent.
plus 48300, forty eight thousand three hundred
times 25% , point two five. plus 25600, 25600 times 15% point one five finally plus eight hundred and
thirty five dollars. im going to pay 21720 dollars. so this is the sum of all of these in total, im going to pay 21 000 i already forgot the number
twenty one thousand seven hundred, seven hundred and twenty.
dollars. and i want to make sure you don't have the misconception. notice you only pay 28% on the incremental
amount when you enter that bracket
so you dont pay this 28%% on the entire hundred thousand dollars. just on the increment above 2250.
you dont pay the 25% of the entire amount just the increment between the 33 and 82.

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