Income Tax Rate Definition

A tax rate is the percentage at which an individual or corporation is taxed.

Income tax rate definition. Tax rates can be classified as one of three types. Income tax is a type of tax that governments impose on income generated by businesses and individuals within their jurisdiction. An income tax is a tax imposed on individuals or entities taxpayers that varies with respective income or profits taxable income. For corporations the effective corporate tax rate is the rate they pay on their pre tax profits.

Marginal tax rate vs. Imposes a progressive tax rate on income meaning the greater the income the higher the percentage of tax levied. Progressive tax proportional or regressive. This is different from the applicable marginal tax rate which is the tax rate applicable on the last dollar.

Because the us income tax system is progressive your tax rate rises as your taxable income rises through two or more tax brackets. Income tax generally is computed as the product of a tax rate times taxable income. Taxation rates may vary by type or characteristics of the taxpayer. The percent of income paid as tax or the percent of the value of a good service or asset paid as tax.

Most britons pay the basic rate on most of their income. 10 15 25 28 33 or 35. Your marginal tax rate is the rate you pay on the taxable income that falls into the highest bracket you reach. The term for the second lowest marginal tax rate in the united kingdom.

The other type of tax rate is the flat tax rate which a few states implement for state income tax under this system of taxation people aren t taxed on a. Flat tax rate. In 2008 one paid the basic rate on all personal income and savings after personal allowances below 37 400 pounds unless one earned less than 2 440 pounds in which case one paid the lower rate. Income tax is used to fund public services pay government.