Changes

==Year 2007 income brackets and tax rates==

==Year 2007 income brackets and tax rates==

An individual's marginal income [[tax bracket]] depends upon their income and their tax-filing classification. As of 2007, there are six tax brackets for ordinary income (ranging from 10% to 35%) and four classifications: single, married filing jointly (or qualified widow or widower), married filing separately, and [[Head of Household (Tax)|head of household]].

An individual's marginal income [[tax bracket]] depends upon their [[income]] and their tax-filing classification. As of 2007, there are six tax brackets for ordinary [[income]] (ranging from 10% to 35%) and four classifications: single, married filing jointly (or qualified widow or widower), married filing separately, and [[Head of Household (Tax)|head of household]].

{| class=wikitable style="text-align:right"

{| class=wikitable style="text-align:right"

|-

|-

|}

|}

An individual pays tax at a given bracket only for each dollar within that bracket's range. For example, a single taxpayer who earned $10,000 in 2007 would be taxed 10% of each dollar earned from the 1st dollar to the 7,825th dollar (10% × $7,825 = $782.50), then 15% of each dollar earned from the 7,826th dollar to the 10,000th dollar (15% × $2,175 = $326.25), for a total of $1,108.75. Notice this amount ($1,108.75) is lower than if the individual had been taxed at 15% on the full $10,000 (for a tax of $1,500). This is because the individual's marginal rate (the percentage tax on the last dollar earned, here 15%) has no effect on the income taxed at a lower bracket (here the first $7,825 of income taxed at 10%). This ensures that every rise in a person's pre-tax salary results in an increase of their after-tax salary, contrary to the popular misconception that being bumped into a higher tax bracket reduces after-tax income.

An individual pays tax at a given bracket only for each dollar within that bracket's range. For example, a single taxpayer who earned $10,000 of [[income]] in 2007 would be taxed 10% of each dollar earned from the 1st dollar to the 7,825th dollar (10% × $7,825 = $782.50), then 15% of each dollar earned from the 7,826th dollar to the 10,000th dollar (15% × $2,175 = $326.25), for a total of $1,108.75. Notice this amount ($1,108.75) is lower than if the individual had been taxed at 15% on the full $10,000 (for a tax of $1,500). This is because the individual's marginal rate (the percentage tax on the last dollar earned, here 15%) has no effect on the [[income]] taxed at a lower bracket (here the first $7,825 of [[income]] taxed at 10%). This ensures that every rise in a person's pre-tax salary results in an increase of their after-tax salary, contrary to the popular misconception that being bumped into a higher tax bracket reduces after-tax [[income]].

==States and Local Municipalities==

==States and Local Municipalities==

==Other Taxation systems==

==Other Taxation systems==

Other state and national proposed tax systems include the Flat Tax and the Fair tax

Other state and national proposed tax systems include the Flat Tax and the Fair tax

*[[Flat Tax]] - creates a single income tax bracket that applies equally to all Americans

*[[Flat Tax]] - creates a single [[income]] tax bracket that applies equally to all Americans

*[[Fair Tax]] - eliminates the income tax in favor of a consumption tax, most often proposed as a ~23% National Sales tax

*[[Fair Tax]] - eliminates the [[income]] tax in favor of a consumption tax, most often proposed as a ~23% National Sales tax

==Sources==

==Sources==