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Federal Taxation Explained


Graduated Income Tax Rates

Federal income taxes are levied with what are known as graduated income tax rates. As your income increases, specific increments of your income are taxed at higher and higher rates.

For 2018, the first $9,525 of your income is taxed at a 10% rate. The next incremental $29,175 of your income is taxed at a 12% rate. The next incremental $43,800 of your income is taxed at a 22% rate. And so on, up to a maximum tax rate of 37%. There are 7 Federal income Tax Brackets & Tax Rates.

Adjusted Gross Income (AGI)

The sum of all of your Federal income, less any reductions to your Federal income, is referred to as your Adjusted Gross Income (AGI). This is the amount that is reported on your Form 1040 tax return, on p.1, line 37, at the bottom of the page (and again on p.2, line 38, at the top of the page).





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