What’s your tax bracket? It’s an easy question to answer, but many people don’t know exactly what our progressive tax structure really means to their tax bill. And most don’t realize that they are paying less in taxes than they think.
Progressivity simply means the more you earn, the more taxes you pay. Our tax system currently has six income tax brackets, and as the money you receive “progresses” through them, your tax rate increases.
But that also has some advantages.
The brackets are allocated by filing status, and each year the income ranges to which each tax rate applies are adjusted for inflation. For illustration purposes, let’s look at the 2008 numbers.
If your salary is $80,000 and ...