Understanding Tax Rates

It is important that people know about income tax rates so they can accurately calculate and file their taxes. IRS announced that the 2010 rates will not be very different with the rates that are used during the previous year. This is due to the minimal inflation and the difficult paces the economy is going through during these times. Personal exemption amount and the standard deduction bracket were kept parallel to the 2009 tax rates. IRS came up with decision as they thought about consumer price index (CPI) and the inactive growth that America is currently going through.

You may think that knowing about federal and state income tax rates is difficult, but you’re wrong. Simply knowing about the rates can already get you to compute and estimate your own taxes. You can also identify which bracket is applicable to your situation when you are aware of the rates. State income tax is commonly around 1% to 10%, and different states have different rates. You must be aware that some states also impose city income taxes. Find out if your state implements this policy so you could accurately compute your taxes.

It is foreseen that in 2011, President Barack Obama will modify the tax policies. Bush rates will no longer be used and instead, the rates during 2001 to 2003 will be implemented. This means that top income tax rates is expected to go back at 39.6 percent whereas the 10 percent low bracket will be removed.

tax rates

It is predicted that the tax that will be paid by the people on 2011 will increase the capital gains and dividend rates on that year. Capital gains are expected to increase by 5 percent compared to the previous year. This means that capital gains will go back to 20 percent. You must also remember that your dividend income might be taxed as your ordinary income. Knowing this would help you properly calculate your taxes that are yet to come.

You must keep yourself updated with the rates imposed during the year. Rates change yearly and you would definitely end up with a wrong computation if you use the rates for the previous year. It is also advisable that you track your previous income and taxes so that you can appropriately chalk out the taxes that you will have for the approaching years. Furthermore, don’t forget to inform yourself about the child tax credit and the estate tax rates for more accurate results.

Government sites shows information about income tax rates. You may easily access it online or you may also download it for better accessibility. Some places may also show the rates tables, just be sure that the information from this place is worth-trusting, so that you’ll be sure that you’re using the correct rates for your tax computations.

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