Tag: income taxes

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What is the Difference Between Progressive and Regressive Taxes?

A progressive tax is a type of tax that takes a larger percentage of income from taxpayers as their income rises. An example is the federal income tax, where there are six marginal tax brackets ranging from 10% (lowest-income taxpayers) to 39.6% (highest-income taxpayers). Most state income taxes have a similar progressive structure.

A regressive tax is the exact opposite. Higher-income taxpayers pay a smaller percentage of their income than lower-income taxpayers because the tax is not based on ability …

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Can Workers’ Income Reduce Their Spouse’s Social Security?

No. The earnings limit ($16,920 in 2017 for beneficiaries who are age 62 through full retirement age) applies only to the income of the person who is collecting a monthly Social Security benefit check. It is that person’s income that determines whether benefits are reduced. One dollar in benefits is withheld for every $2 in earnings above the earnings limit amount.

Where a working spouse’s income will have an effect, however, is in the taxation of Social Security benefits if …

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What does it mean when you have pre-tax dollar health insurance premiums deducted from your pay?

When you pay for benefits such as health insurance with pre-tax (also called before-tax) dollars, the deductions are taken off your gross income before income taxes are paid. Taxes are then calculated on the reduced salary amount. Having pre-tax dollar deductions results in less income tax paid than would otherwise be the case.

Examples of items that can be paid with pre-tax dollars include medical and dental insurance and employee parking fees. By way of contrast, after-tax dollar deductions are …

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Income Taxes

The goal for taxpayers is to pay no more than the least possible tax owed. Avoiding taxes through legal tax strategies is not to be confused with illegal tax evasion. Legally avoiding taxes means using effective financial record-keeping, decision making, and planning strategies to reduce your total income tax. One example of good tax management is adjusting the amount of federal income tax withheld from your paycheck. If you receive a big income tax refund (over $500) each year, you …

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