The Truth About Income Tax Rates

Income tax brackets are the fundamental characteristic of a progressive taxing system. The United States of America taxes income based on an individual tax payer's salary; those who earn more are taxed at higher rates while conversely, those who earn less are taxed at lower rates. Income tax brackets divide the taxpayer population by the salary earned; each bracket is attached with a corresponding tax rate or percentage.

The percentage attached is the percent an individual is taxed at. For example, the highest current tax rate is 35%, and is applied to all individuals who earn over $373,650. In turn, the lowest tax bracket is 10% and is currently attached to all employees earning less than $8,375.

The income tax brackets are the true rate the taxpayer pays on their "last dollar" earned. The income tax brackets and the corresponding rates attached are not set in stone, but instead, liable to fluctuate based on the financial policy of the party in office.

The income tax brackets place an obligation on those earning heft salaries to kick back a larger percentage and thus a larger sum of their income to supply the nation with essential public goods and services. The majority of citizens in the United States do not qualify for the top brackets, however, an overwhelming percentage of the total tax collected is collected from those in the top tax bracket.

NEXT: Understanding the Factors of Income Elasticity