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The Water Cooler
General Discussion
Bring back the 91% tax rate
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<blockquote data-quote="inactive" data-source="post: 1993663" data-attributes="member: 7488"><p>That's the <em>withholding </em>rate for a bonus or overtime, not the <em>marginal tax</em> rates on your total income for the year. If your income increases enough to push you to a higher bracket, the higher rate is applied to the additional income earned; the "first" money earned is taxed at the "first" or lower rate. </p><p></p><p>For example, the first 25k of you income is taxed the same as someone who only earned 25k in total (deductions, credits, EIC etc. notwithstanding). The next monies are taxed at the progressively higher rate brackets.</p><p></p><p>The <em>withholding </em>is often higher on bonuses and overtime because many people allot their taxes to be exactly withheld over their normal paycheck, and that extra income is withheld higher in case it goes into a higher marginal rate bracket. If you don't hit that bracket, you get it back on your return filing the next year. This is a payroll thing, as in your employer or payroll processor, not necessarily the government.</p></blockquote><p></p>
[QUOTE="inactive, post: 1993663, member: 7488"] That's the [I]withholding [/I]rate for a bonus or overtime, not the [I]marginal tax[/I] rates on your total income for the year. If your income increases enough to push you to a higher bracket, the higher rate is applied to the additional income earned; the "first" money earned is taxed at the "first" or lower rate. For example, the first 25k of you income is taxed the same as someone who only earned 25k in total (deductions, credits, EIC etc. notwithstanding). The next monies are taxed at the progressively higher rate brackets. The [I]withholding [/I]is often higher on bonuses and overtime because many people allot their taxes to be exactly withheld over their normal paycheck, and that extra income is withheld higher in case it goes into a higher marginal rate bracket. If you don't hit that bracket, you get it back on your return filing the next year. This is a payroll thing, as in your employer or payroll processor, not necessarily the government. [/QUOTE]
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Bring back the 91% tax rate
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