Sunday, July 5, 2015

Different Types of Taxes in US

There are several kind of taxes in US, except the federal income tax which applies to all country the other taxes have their own local state rules.

1. Income Tax
   1.1. Federal Income Tax
   US government collects tax each year based on the income of individuals or families. This is the most important tax in US and it rate varies based on income of the tax payers. Here is the tax rate for a few bracket of a married tax filers in 2014.
25% for income of ~73K to ~148K
28% for income of ~148K to ~226K
33% for income of ~226K to 405K
You can find the complete list at http://taxfoundation.org/article/2014-tax-brackets.
   1.2. State Income Tax
   Most of the us states collect tax in addition to what federal government collects as federal income tax and this is one of the major source of income for US states. Here is some information on state tax based on 2014 rules.
  • states like Texas, Florida, Nevada, Washington, Wyoming, South Dakota and Alaska do not collect income tax.
  • Tennessee and New Hampshire only applies income tax to interests and dividend.
  • 8 states apply single tax rates to all of tax filers
  • California has the highest tax rate followed by Hawaii and Oregon.
   1.3. California State Income Tax
   California tax rates for 2 brackets of single tax filer is as below. for married filer the rate remain the same however the brackets are doubled.
9.3% for income of ~50K to ~260K
10.3% for income of ~260K to ~312K
11.3% for income of ~311K to ~520K

2. Sales Tax
In most of the US states when you purchase something you have to pay tax however the five states of Oregon, New Hampshire, Montana, Delaware and Alaska do not have sales tax.
Some items like food and clothes are not taxed in some state too.
In California the base rate of sales tax is 7.5% however groceries and prescription drug are exempt from sales tax.

3. Property Tax
Property tax is another source of income for states however it usually help to pay for public schools, college and similar governmental things.
The highest rate for property tax is in New Jersey (1.89%), followed by New Hampshire (1.89%) and Texas (1.81%). California's property tax is 0.74%.
Please note that in some regions there are other taxes like Mellow-Rooz and ...

4. Capital Gain Tax
Tax on the profit of selling something that was purchased at a lower cost. The most comoon one come from stock market.
Based on the income, it can fall down in 0%, 15% or 20% tax rate bracket.

5. Other Taxes
There are other taxes like estate, gift, hotel and sin taxes that are less important than above ones.

Cheers,
Hadi

References:
http://www.immihelp.com/
http://taxfoundation.org/


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