Federal Income Tax
Federal income tax is a tax imposed by the United States government on the income of individuals, corporations, trusts, and other legal entities. The federal income tax is based on the amount of income earned and is calculated according to a progressive tax rate structure. The amount of tax owed is determined by the taxpayer’s filing status, income level, and other factors. The federal income tax is collected by the Internal Revenue Service (IRS) and is used to fund the operations of the federal government.
History of Federal Income Tax
The federal income tax was first introduced in the United States in 1862 as a way to fund the Civil War. The tax was initially imposed on individuals with incomes over $800 and corporations with incomes over $5,000. Over the years, the tax has been amended and expanded to include a variety of income sources, including wages, salaries, interest, dividends, capital gains, and other forms of income. The current federal income tax system was established in 1913 with the passage of the Sixteenth Amendment to the United States Constitution.
Comparison of Tax Rates
| Taxable Income | Tax Rate |
|---|---|
| $0 – $9,875 | 10% |
| $9,876 – $40,125 | 12% |
| $40,126 – $85,525 | 22% |
| $85,526 – $163,300 | 24% |
| $163,301 – $207,350 | 32% |
| $207,351 – $518,400 | 35% |
| $518,401 and above | 37% |
Summary
Federal income tax is a tax imposed by the United States government on the income of individuals, corporations, trusts, and other legal entities. The federal income tax is based on the amount of income earned and is calculated according to a progressive tax rate structure. The amount of tax owed is determined by the taxpayer’s filing status, income level, and other factors. For more information on federal income tax, visit the Internal Revenue Service website or consult a tax professional.
See Also
- Taxable Income
- Tax Rate
- Tax Brackets
- Tax Deduction
- Tax Credit
- Tax Exemption
- Taxable Income
- Taxable Income
- Taxable Income
- Taxable Income
