Do you know what your tax rate is?
That’s a trick question as you really have two tax
rates: 1) your Marginal Tax Rate and 2) your Effective Tax Rate.
To understand each, you need to understand our tax system. The U.S. tax
system is not based on a single tax
rate, but rather a series of tax rates known as tax brackets based on your amount of taxable
income. Everyone pays the same tax rates at each income level, and the more
taxable income you have, the higher your tax rate.
