### A Brief Study of Taxes - Tax Brackets

Yesterday I posted a short bit comparing the taxes of two different families (Married filing jointly). Today I'll show you how the taxes are computed. It is really simple as long as you know what the different brackets are. Also, it helps to have excel so that you can program it to compute them for you.

First, here is a list of the income tax brackets for 1998 - 2005 (1999 is excluded because I couldn't find the info if you have access to this information, please send it to me):

Now I'll show you how to calculate the taxes due for a family. For this exercise, we will assume that this household has a taxable income of $60,000 and they are going to file "married filing jointly." We will calculate the tax for the 2005 year.

Looking at the bracket chart you can see that the first $14,600 of the $60,000 will be taxed at 10%, which is $1,460. The next $44,800 ($59,400 - $14,600) will be taxed at the 15% rate which comes to $6,720. The remaining $600 will be taxed at the 25% rate for a tax of $150. Adding them together, we get a total tax bill of $8,330 ($1,460 + $6,720 + $150 = $8,330).

So, there you have it. Hopefully I made it easy enough to understand. The hardest part is getting to the taxable income figure. Maybe I'll cover that someday.

Tags: Taxes, Tax Brackets, How to Compute Taxes, Understanding Taxes

First, here is a list of the income tax brackets for 1998 - 2005 (1999 is excluded because I couldn't find the info if you have access to this information, please send it to me):

2005

$0 $14,60010%$14,601 $59,40015%$59,401 $119,95025%$119,951 $182,80028%$182,801 $326,45033%Greater Than $326,45035%

2004$0 $14,30010%$14,301 $58,10015%$58,101 $117,25025%$117,251 $178,65028%$178,651 $319,10033%Greater Than $319,10035%

2003$0 $14,00010%$14,001 $56,80015%$56,801 $114,65025%$114,651 $174,70028%$174,701 $311,95033%Greater Than $311,95035%

2002$0 $12,00010%$12,001 $46,70015%$46,701 $112,85027%$112,851 $171,95030%$171,951 $307,05035%Greater Than $307,05039%

2001$0 $45,20015%$45,201 $109,25028%$109,251 $166,50031%$166,501 $297,35036%Greater Than $297,35039%

2000$0 $43,85015%$43,851 $105,95028%$105,951 $161,45031%$161,451 $288,35036%Greater Than $288,35040%

1998$0 $42,35015%$42,351 $102,30028%$102,301 $155,95031%$155,951 $278,45036%Greater Than $278,45040%

Now I'll show you how to calculate the taxes due for a family. For this exercise, we will assume that this household has a taxable income of $60,000 and they are going to file "married filing jointly." We will calculate the tax for the 2005 year.

2005

$0 $14,60010%$14,601 $59,40015%$59,401 $119,95025%$119,951 $182,80028%$182,801 $326,45033%Greater Than $326,45035%

Looking at the bracket chart you can see that the first $14,600 of the $60,000 will be taxed at 10%, which is $1,460. The next $44,800 ($59,400 - $14,600) will be taxed at the 15% rate which comes to $6,720. The remaining $600 will be taxed at the 25% rate for a tax of $150. Adding them together, we get a total tax bill of $8,330 ($1,460 + $6,720 + $150 = $8,330).

So, there you have it. Hopefully I made it easy enough to understand. The hardest part is getting to the taxable income figure. Maybe I'll cover that someday.

Tags: Taxes, Tax Brackets, How to Compute Taxes, Understanding Taxes

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