Federal tax rates are the rates at which the U.S. government taxes income. These rates are progressive, meaning the more you earn, the higher the percentage of income that gets taxed. Understanding these rates is crucial for individuals and businesses alike, as it impacts how much you owe to the government and how much you take home after taxes.
The tax rates directly affect how much tax you owe. The higher your taxable income, the higher the percentage of that income will be taxed. Understanding the tax brackets helps you estimate your total tax liability.
By knowing the federal tax rates and your current tax bracket, you can engage in tax planning. For example, if you are close to moving into a higher tax bracket, you may decide to defer income or increase tax deductions or credits to minimize your overall tax burden.
Click here to see the IRS Federal Income Tax Rates and Brackets.