Tax bracket

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 — 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 equation. 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

In 2006, the Federal tax brackets for a single (unmarried) person were:<ref>Template:Cite web /url=http://www.edwardjones.com/cgi/getHTML.cgi?page=/USA/resources/tax/brackets last year.html /title=Federal Tax Brackets /publisher=Edward Jones Investments /accessdate=2006-08-30</ref>

• 10%: from $0 to $7,550
• 15%: from $7,551 to $30,650
• 25%: from $30,651 to $74,200
• 28%: from $74,201 to $154,800
• 33%: from $154,801 to $336,550
• 35%: $336,551 and above

This applies only to amounts above the standard deduction of $5,150 for an individual. For example, a single individual would actually pay 0% on the first $5,150, 10% between $5,151 and $12,700, 15% between $12,701 and $35,800, 25% between $35,801 and $79,350, and so on.

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:

1992   1993 - 2000   2001   2002   2003 - 2007 15% 15% 15% 10% 10% 15% 15% 28% 28% 27.5% 27% 25% 31% 31% 30.5% 30% 28% 36% 35.5% 35% 33% 39.6% 39.1% 38.6% 35%

To compare how federal tax brackets changed from 1950 to 1980, look at the comparative chart in this link. [1]

Most states also levy income tax, exceptions being Alaska, Florida, Nevada, South Dakota, Texas, Washington, New Hampshire, Tennessee and Wyoming; see [2]

Tax brackets in the UK

• Refer to Income tax 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 [3] 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 due to the fact that 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 2006). All values in NZD/New Zealand dollars. (With earner levy not included)

• 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 2006 tax year is 1.3%

Checkout http://www.ird.govt.nz/income-tax-individual/itaxsalaryandwage-incometaxrates.html for more details on taxation in New Zealand

Indexing personal tax thresholds

                    Current level                          New level as at 1 April 2008
Lower threshold       $9,500                                         $10,081   
Middle threshold      $38,000                                        $40,324  
Upper threshold       $60,000                                        $63,672 

Visit: http://www.treasury.govt.nz/budget2005/summary/indexing.asp

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

• 0% : on taxable income of $7999.00 or less
• 15.5%: on taxable income of $37,178 or less
• 22%: on taxable income of more than $37,178, but not more than $74,357
• 26%: on taxable income of more than $74,357, but not more than $120,887
• 29%: on taxable income of more than $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

2005-2006

The income tax is administered by the Federal government in Australia. The tax brackets for the financial year 2005-2006 are as follows:<ref name=ato>Template: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>

• 0%: from $0 to $6,000
• 15%: from $6,001 to $21,600
• 30%: from $21,601 to $63,000
• 42%: from $63,001 to $95,000
• 47%: $95,001 and above

These tax brackets are for Australian residents, and do not include the 1.5% Medicare levy. All figures are in Australian Dollars.

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 />

• 0%: from $0 to $6,000
• 15%: from $6,001 to $25,000
• 30%: from $25,001 to $75,000
• 40%: from $75,001 to $150,000
• 45%: $150,001 and above

Again, the tax brackets do not include the 1.5% Medicare levy. All figures are in Australian Dollars.