Tax bracket 768124 214980836 2008-05-26T04:44:02Z 60.234.169.232 /* Tax brackets in New Zealand */ '''Tax brackets''' are the divisions at which [[tax rates]] change in a [[progressive tax]] system (or an explicitly [[regressive tax]] system, although this is much rarer). Essentially, they are the cutoff values for taxable income &mdash; income past a certain point will be taxed at a higher rate. ==Example== Imagine that there are three tax brackets: 10%, 20%, and 30%. The 10% rate applies to income from $1 to $10,000; the 20% rate applies to income from $10,001 to $20,000; and the 30% rate applies to all income above $20,000. Under this system, someone earning $10,000 would be taxed at a rate of 10%, paying a total of $1,000. Someone earning $5,000 would pay $500, and so on. Meanwhile, someone earning $35,000 would face a more complicated calculation. The rate on the first $10,000 would be 10%; the rate from $10,001 to $20,000 would be 20%; and the rate above that would be 30%. Thus, he would pay $1,000 for the first $10,000 of income; $2,000 for the second $10,000 of income; and $4,500 for the last $15,000 of income; in total, he would pay $7,500, or about 21.4%. ==Tax brackets in the USA== {{split}} For [[2008]], the Federal tax brackets for a single (unmarried) person are:<ref>{{cite web |url=http://www.edwardjones.com/cgi/getHTML.cgi?page=/USA/resources/tax/brackets/2008.html |title=Federal Tax Brackets |publisher=[[Edward Jones Investments]]}}</ref> *10%: from $0 to $8,025 *15%: from $8,026 to $32,550 *25%: from $32,551 to $78,850 *28%: from $78,851 to $164,550 *33%: from $164,551 to $357,700 *35%: $357,701 and above This applies only to amounts above $8,950 ([[standard deduction]] of $5,450 plus the one [[United States Federal Income Tax Personal Exemption|personal exemption]] of $3,500) for an individual. For example, a single individual would actually pay: *0% of the first $8,950 of income, *10% of the income between $8,951 and $16,975, *15% of the income between $16,976 and $41,500, *25% of the income between $41,501 and $87,800, *28% of the income between $87,801 and $173,500, *33% of the income between $173,501 and $366,650, and *35% of the income exceeding $366,650. For [[2008]], The value of each personal and dependency exemption, available to most taxpayers, is $3,500, up $100 from 2007. The new standard deduction is $10,900 for married couples filing a joint return (up $200), $5,450 for singles and married individuals filing separately (up $100) and $8,000 for heads of household (up $150). Nearly two out of three taxpayers take the standard deduction, rather than itemizing deductions, such as mortgage interest, charitable contributions and state and local taxes. <ref>http://www.irs.gov/newsroom/article/0,,id=174876,00.html</ref> <P> Two higher tax brackets were added at the top in 1993, and then taxes in all brackets were lowered in 2001 through 2003 as follows: <P> <TABLE BORDER="0" CELLPADDING="0" CELLSPACING="0" BGCOLOR="#CCCC99"><TR><TD> <TABLE WIDTH="350" BORDER="1" CELLPADDING="2" CELLSPACING="2"> <TR BGCOLOR="#E0E0E0"><TD ALIGN="CENTER">&nbsp; 1992</TD> <TD ALIGN="CENTER">&nbsp; 1993 - <BR> 2000</TD><TD ALIGN="CENTER">&nbsp; 2001</TD><TD ALIGN="CENTER">&nbsp; 2002</TD><TD ALIGN="CENTER">&nbsp; 2003 - <BR> 2007</TD></TR> <TR BGCOLOR="#FFFFFF"><TD ALIGN="RIGHT" VALIGN="BOTTOM" ROWSPAN=2> 15%</TD> <TD ALIGN="RIGHT" VALIGN="BOTTOM" ROWSPAN=2> 15%</TD><TD ALIGN="RIGHT" VALIGN="BOTTOM" ROWSPAN=2> 15%</TD><TD ALIGN="RIGHT"> 10%</TD><TD ALIGN="RIGHT"> 10%</TD></TR> <TR BGCOLOR="#FFFFFF"> <TD ALIGN="RIGHT"> 15%</TD><TD ALIGN="RIGHT"> 15%</TD></TR> <TR BGCOLOR="#FFFFFF"><TD ALIGN="RIGHT"> 28%</TD> <TD ALIGN="RIGHT"> 28%</TD><TD ALIGN="RIGHT"> 27.5%</TD><TD ALIGN="RIGHT"> 27%</TD><TD ALIGN="RIGHT"> 25%</TD></TR> <TR BGCOLOR="#FFFFFF"><TD ALIGN="RIGHT" VALIGN="TOP" ROWSPAN=3> 31%</TD> <TD ALIGN="RIGHT"> 31%</TD><TD ALIGN="RIGHT"> 30.5%</TD><TD ALIGN="RIGHT"> 30%</TD><TD ALIGN="RIGHT"> 28%</TD></TR> <TR BGCOLOR="#FFFFFF"> <TD ALIGN="RIGHT"> 36%</TD><TD ALIGN="RIGHT"> 35.5%</TD><TD ALIGN="RIGHT"> 35%</TD><TD ALIGN="RIGHT"> 33%</TD></TR> <TR BGCOLOR="#FFFFFF"> <TD ALIGN="RIGHT"> 39.6%</TD><TD ALIGN="RIGHT"> 39.1%</TD><TD ALIGN="RIGHT"> 38.6%</TD><TD ALIGN="RIGHT"> 35%</TD></TR> </TABLE> </TD></TR></TABLE> <P><P> An example will show how Federal Income Taxes in the United States are calculated. <p> Definitions first: <p> '''Gross Salary''' is the amount your employer pays you, i.e., John gets paid $50/hour as an electrical engineer. His annual gross salary is $50/hour x 2,000 hours/year = $100,000/year. <p> '''W-2 wages''' are the wages that appear on the employee’s W-2 issued by his employer each year in January. A copy of the W-2 is sent to the Internal Revenue Service (IRS). It is the Gross Salary less any contributions to pre-tax plans. The W-2 form also shows the amount withheld by the employer for federal income tax. <p> W-2 Wages = Gross Salary less (contributions to employer retirement plan) less (contributions to employer health plan) less (contributions to some other employer plans) <p> '''Total Income''' is the sum of all taxable income, including the W-2 wages. Almost all income is taxable. There are a few exemptions for individuals such as non-taxable interest on government bonds, a portion of the Social Security (SS) income (not the payments to SS, but the payments from SS to the individual), etc. <p> '''Adjusted Gross Income''' (AGI) is Total Income less some specific allowed deductions. Such as; alimony paid (income to the recipient), permitted moving expenses, self-employed retirement program, student loan interest, etc. <p> '''Itemized Deductions''' are other specific deductions such as; mortgage interest on a home, state income taxes or sales taxes, local property taxes, charitable contributions, state income tax withheld, etc. <p> '''Standard Deduction''' is a sort of minimum Itemized Deduction. If you add up all your itemized Deductions and it is less than the Standard Deduction you take the Standard Deduction. In 2007 this was $5,350 for those filing individually and $10,700 for married filing jointly. <p> '''Personal Exemption''' is a tax exemption in which the taxpayer can deduct an amount from their gross income for each dependent they can claim. It was $3,400 in 2007. <p><p> The Example: <p> John is 44, married, has two children and earned a gross salary of $100,000 in 2007. He contributes the maximum $15,500/year to his employer’s 401(k) retirement plan, pays $1,800/year for his employer’s family health plan, and $500/year to his employer’s Flexfund medical expense plan. All of the plans are allowed pre-tax contributions. <p> Gross pay = $100,000 <p> W-2 wages = $100,000 - $15,500 - $1,800 - $500 = $82,200 <p> John’s and his wife’s other income is; $12,000 from John’s wife’s wages (she also got a W-2 but had no pre-tax contributions), $200 interest from a bank account, $150 state tax refund, <P> Total Income = $82,200 + $12,000 + $200 + $150 = $94,550. <P> John’s employer reassigned John to a new office and his moving expenses were $8,000, of which $2,000 was not reimbursed by his employer. <P> Adjusted Gross Income = $94,550 - $2,000 = $92,550. <P> John’s Itemized Deductions were $22,300 (he had some big mortgage interest, property taxes, and state income tax withheld). <P> John had four personal exemptions--himself, his wife and two children. His total personal exemptions were 4 x $3,400 = $13,600. <P> Taxable Income = $92,550 - $22,300 - $13,600 = $56,650. <P> The tax on the Taxable Income is found in a Tax Table if the Taxable Income is less than $100,000 and is computed if over $100,000. Both will be used. The Tax Tables can be found in the 2007 1040 Instructions. The Tax Tables list income in $50 increments for all categories of taxpayers, single, married filing jointly, married filing separately, and head of household. For the Taxable Income range of "at least $56,650 but less than $56,700" the tax is $7,718 for a taxpayer who is married filing jointly. <P> The 2007 Tax Rates Schedule<ref>{{cite web |url=http://www.irs.gov/formspubs/article/0,,id=164272,00.html |title=2007 Federal Tax Rates Schedule |publisher=[[IRS]] |accessdate=2007-09-17}}</ref> for married filing jointly is: <P> {| class="wikitable" ! Over !! But not over !! !! of the amount over |- | $0 || $15,650 || 10% || $0 |- | $15,650 || $63,700 || $1,565+15% || $15,650 |- | $63,700 ||$128,500 || $8,772.50+25%|| $63,700 |- |$128,500||$195,850 || $24,972.50+28%||$128,500 |- |$195,850||$349,700 || $43,830.50+33%||$195,850 |- |$349,700||------------|| $94,601+35%||$349,700 |} <P> The tax is 10% on the first $15,650 = $1,565.00<P> plus 15% of the amount over $15,650 up to $56,650 = $41,000 x 15% = $6,150.00<P> Total = $7,715.00<P> <P> The difference is because we used the Tax Tables in the first determination of tax and the tables are in $50 increments. John’s Taxable Income was at the bottom of the increment. If his Taxable Income had been $57,575, in the middle of the increment, then the calculated amount would be $7,718.75. <P> In addition to the Federal Income tax, John will probably be paying state income tax, Social Security tax, and Medicare tax. The Social Security tax in 2007 for John is 6.2% on the first $97,500 of earned income (wages), or a maximum of $6,045. There are no exclusions from earned income for Social Security so John will pay the maximum of $6,045. His wife will pay $12,000 x 6.2% = $744. Medicare is 1.45% on all earned income with no maximum. John and his wife will pay $112,000 x 1.45% = $1,624 for Medicare in 2007. <P> To compare how federal tax brackets changed from 1950 to 1980, look at the comparative chart in this link. [http://www.stanford.edu/class/polisci120a/immigration/Federal%20Tax%20Brackets.pdf] Most states also levy income tax, exceptions being Alaska, Florida, Nevada, South Dakota, Texas, Washington, New Hampshire, Tennessee and Wyoming; see [http://www.taxadmin.org/fta/rate/ind_inc.html]<br /> See also [[Rate schedule (federal income tax)]] ==Tax brackets in the UK== See [[Taxation in the United Kingdom]] ==Tax Brackets in Switzerland== Personal income tax is progressive in nature. The total rate does not usually exceed 30%. The Swiss Federal Tax Administration website [http://www.estv.admin.ch] provides a broad outline of the Swiss tax system, and full details and tax tables are available in PDF documents. The complexity of the system is partly because the Confederation, the 26 Cantons that make up the federation, and about 2 900 communes [municipalities] levy their own taxes based on the Federal Constitution and 26 Cantonal Constitutions. With the additional levies, the total tax rate is often in excess of 55%-60% at its highest bracket. ==Tax brackets in New Zealand== [[New Zealand]] has the following income tax brackets (as of May 2007). All values in [[NZD|New Zealand dollars]]. (With earner levy not included):{{Fact|date=February 2007}} *19.5% up to $38,000 *33% from $38,001 to $60,000 *39% $60,001 and above *46.3% when the employee does not complete a declaration form (IR330) Earners ACC Levy for the 2007 tax year is 1.3% See http://www.ird.govt.nz/income-tax-individual/itaxsalaryandwage-incometaxrates.html for more details on taxation in New Zealand Budget 2008 delivers working New Zealanders tax cuts of $10.6 billion over 4 years. New rates shown below: New rates from 1 October 2008 Income to $14,000 12.5% $14,001 - $40,000 21% $40,001 - $70,000 33% $70,001 and over 39% with further threshold adjustments on 1 April 2010 & April 2011. ==Tax brackets in Canada== [[Canada]]'s federal government has the following tax brackets for the 2007 tax year: Federal Tax Rates for 2007:http://www.cra-arc.gc.ca/tax/individuals/faq/taxrates-e.html#federal *15% '''on the first''' $37,178 of taxable income, '''plus''' *22% '''on the next''' $37,179 of taxable income (on the portion of taxable income between $37,178 and $74,357), '''plus''' *26% '''on the next''' $46,530 of taxable income (on the portion of taxable income between $74,357 and $120,887), '''plus''' *29% of taxable income '''over''' $120,887 Each province adds their own tax on top of the federal tax. Provincial / Territorial Tax Rates for 2007:http://www.cra-arc.gc.ca/tax/individuals/faq/taxrates-e.html#provincial ==Tax brackets in Australia== The [[income tax]] is administered by the Federal government in [[Australia]]. Australian income tax rates for prior years can be found at:http://www.ato.gov.au/individuals/content.asp?doc=/content/73969.htm === 2005–2006 === The tax brackets for the [[financial year]] [[2005]]-[[2006]] are as follows:<ref name=ato>{{cite web |url=http://www.ato.gov.au/individuals/content.asp?doc=/content/12333.htm&mnu=5464&mfp=001/002 |title=Individual income tax rates |publisher=Australian Tax Office |accessdate=2006-08-30}}</ref> {| class="wikitable" |- ! [[Taxable income]] ! Tax on this income |- | $0 – $6,000 | Nil |- | $6,001 – $21,600 | 15c for each $1 over $6,000 |- | $21,601 – $63,000 | $2,340 plus 30c for each $1 over $21,600 |- | $63,001 – $95,000 | $14,760 plus 42c for each $1 over $63,000 |- | Over $95,000 | $28,200 plus 47c for each $1 over $95,000 |} These tax brackets are for Australian residents, and do not include the 1.5% [[Medicare levy]] or 1% [[Medicare levy surcharge]] (for individuals without private health insurance). All figures are in [[Australian Dollar]]s. === 2006–2007 === The Federal budget in May 2006 announced new tax rates for the 2006-2007 financial year. They are as follows :<ref name=ato /> {| class="wikitable" |- ! [[Taxable income]] ! Tax on this income |- | $0 – $6,000 | Nil |- | $6,001 – $25,000 | 15c for each $1 over $6,000 |- | $25,001 – $75,000 | $2,850 plus 30c for each $1 over $25,000 |- | $75,001 – $150,000 | $17,850 plus 40c for each $1 over $75,000 |- | Over $150,000 | $47,850 plus 45c for each $1 over $150,000 |} Again, the tax brackets do not include the 1.5% [[Medicare levy]]. All figures are in [[Australian Dollar]]s. === 2007–2008 === The Federal budget in May 2007 [http://www.treasurer.gov.au/tsr/content/pressreleases/2007/034.asp] announced new tax rates for the 2007-2008 financial year. They are as follows :<ref name=ato /> {| class="wikitable" |- ! [[Taxable income]] ! Tax on this income |- | $0 – $6,000 | Nil |- | $6,001 – $30,000 | 15c for each $1 over $6,000 |- | $30,001 – $75,000 | $3,600 plus 30c for each $1 over $30,000 |- | $75,001 – $150,000 | $17,100 plus 40c for each $1 over $75,000 |- | Over $150,000 | $47,100 plus 45c for each $1 over $150,000 |} Again, the tax brackets do not include the 1.5% [[Medicare levy]]. All figures are in [[Australian Dollar]]s. === 2008–2009 === The Federal budget in May 2008 [http://www.budget.gov.au/] announced new tax rates for the 2008-2009 financial year. They are as follows :<ref name=ato /> {| class="wikitable" |- ! [[Taxable income]] ! Tax on this income |- | $0 – $6,000 | Nil |- | $6,001 – $34,000 | 15c for each $1 over $6,000 |- | $34,001 – $80,000 | $4,200 plus 30c for each $1 over $34,000 |- | $80,001 – $180,000 | $18,000 plus 40c for each $1 over $80,000 |- | Over $180,000 | $58,000 plus 45c for each $1 over $180,000 |} Again, the tax brackets do not include the 1.5% [[Medicare levy]]. All figures are in [[Australian Dollar]]s. ==Tax brackets in the Netherlands== See [[income tax in the Netherlands]]. ==Tax brackets in Singapore== === 2007 & 2008=== {| class="wikitable" |- ! [[Taxable income]] ! Tax on this income |- | $0 – $20,000 | Nil |- | $20,001 – $30,000 | 3.5c for each $1 over $20,000 |- | $30,001 – $40,000 | $350 plus 5.5c for each $1 over $30,000 |- | $40,001 – $80,000 | $900 plus 8.5c for each $1 over $40,000 |- | $80,001 – $160,000 | $4300 plus 14c for each $1 over $80,000 |- | $160,001 – $320,000 | $15,500 plus 17c for each $1 over $160,000 |- | Over $320,000 | $42,700 plus 20c for each $1 over $320,000 |} All figures are in [[Singapore dollar]]s. There will be a personal tax rebate of 20% granted for 2008, up to a maximum of $2,000. ==Tax brackets in Malta== === 2008 === Single Rates: {| class="wikitable" |- ! [[Taxable income]] ! Tax on this income |- | €0 – €8,150 | Nil |- | €8,151 -€14,000 | 15% |- | €14,001 -€19,000 | 25% |- | €19,001 &over | 35% |} Married Rates: {| class="wikitable" |- ! [[Taxable income]] ! Tax on this income |- | €0 – €11,400 | Nil |- | €11,401 -€20,500 | 15% |- | €20,501 -€28,000 | 25% |- | €28,001 &over | 35% |} ==References== <references/> [[Category:Taxation]]