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I don’t know how tax system works in the UK, but to calculate US taxes you cannot just simply add the tax rates. Because taxes in the US are progressive. For bo
by dmode 7y ago
I don’t know how tax system works in the UK, but to calculate US taxes you cannot just simply add the tax rates. Because taxes in the US are progressive. For both Fed and CA taxes, your first $x gets taxed at a lower rate, next $y gets taxed at a slightly higher rate. The highest rate kicks in >$1mn. Then we have a standard deduction of $23k for married couples. Which means $23k of your income is not taxed. Then state taxes are deductible on your Fed income, which means you can subtract the state taxes to calculate your Fed tax income bracket. Then there are myriad of deductions for property tax, mortgage, child care, health care, etc etc. Finally SSN and Medicare tops out at $100k, and you don’t pay beyond that. Net effect is you are probably paying close to 25-30% in effective tax rate
- usaar333 7y agoYou are talking about effective rates (affected by deductions); parent (and I below) are talking about marginal rates (the rate isn't generally affected by deductions - only the income theshold)