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Simple English definitions for legal terms
tax-rate schedule
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A quick definition of tax-rate schedule:
A tax-rate schedule is a chart that helps determine how much tax someone owes based on how much money they make and their filing status (like if they're married and filing taxes together). It's like a map that shows you the different tax rates for different income levels. Some people call it a tax table.
A more thorough explanation:
A tax-rate schedule is a chart or table used to calculate the amount of tax owed on a specific level of taxable income. It is based on the taxpayer's status, such as married filing jointly or single. The tax-rate schedule shows the tax rate that applies to each level of income, and the taxpayer uses this information to calculate their tax liability.
Let's say you are a single taxpayer with a taxable income of $50,000. You would use the tax-rate schedule to determine your tax liability. The schedule might look something like this:
| Taxable Income | Tax Rate |
|---|---|
| $0 - $9,875 | 10% |
| $9,876 - $40,125 | 12% |
| $40,126 - $85,525 | 22% |
| $85,526 - $163,300 | 24% |
| $163,301 - $207,350 | 32% |
| $207,351 - $518,400 | 35% |
| Over $518,400 | 37% |
Based on this tax-rate schedule, a single taxpayer with a taxable income of $50,000 would fall into the second tax bracket and owe 12% of their income in taxes, or $6,000.
Another example would be a married couple filing jointly with a taxable income of $100,000. They would use the same tax-rate schedule, but with different income thresholds for each tax bracket. Based on the schedule, they would fall into the fourth tax bracket and owe 24% of their income in taxes, or $24,000.
These examples illustrate how a tax-rate schedule is used to determine the amount of tax owed based on a taxpayer's income and filing status.