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Taxes: How it works
• First we need an income
http://www.bls.gov/oes/current/oes_nat.htm
• Write down this career and your income.
Taxes: How it works
Start with your gross income (Example: $119,726)
(1) Subtract away your FICA, Example: 119,726(.91) =108,950
use 9% of your gross.
(2) Subtract away your standard deduction. Example:
108,950
- 8950
100,000
Yes, I am
making this
easy on
myself!
This Net Income Is Taxed
2012 Federal Income Tax Brackets
Tax
Rate
Married Filing Jointly or
Qualified Widow(er)
Single
Married Filing Separately
Head of Household
over
up to
over
up to
over
up to
over
up to
10%
$0
$8,700
$0
$17,400
$0
$8,700
$0
$12,400
15%
$8,700
$35,350
$17,400
$70,700
$8,700
$35,350
$12,400
$47,350
25%
$35,350
$85,650
$70,700
$142,700
$35,350
$71,350
$47,350
$122,300
28%
$85,650
$178,650
$142,700
$217,450
$71,350
$108,725
$122,300
$198,050
33%
$178,650
$388,350
$217,450
$388,350
$108,725
$194,175
$198,050
$388,350
35%
$388,350
$388,350
$194,175
$388,350
• Married income of 100,000 would pay this tax:
• = (10%)(17,400) + (15%)(70,700-17,400) + (25%)(100,000-70,700)
• = $17,060 is the total federal income tax.
Taxes: How it works
Oregon State Income Tax Tables
Tax Rate Chart J: For persons filing "Jointly,"
Tax Rate Chart S: Persons Filing "Single" or
"Head of Household," or "Qualifying
"Married Filing Separately"
Widow(er) with Dependent Child”
Not over $3,050
5% of taxable income
Not over $6,010
5% of taxable income
Over $3,050 but not
$153 plus 7% of the
Over $6,010 but not
$305 plus 7% of the
over $7,600
excess over $3,050
over $15,200
excess over $6,010
$471 plus 9% of the
$942 plus 9% of the
Over $7,600
Over $15,200
excess over $7,600
excess over $15,200
(1) 100,000 – 17,060 = $82,940 is taxed by Oregon.
(2) 942 + .09(82,940)
(3) $8,406.60 is the Oregon tax.
Taxes: How it Works
• Your total income after taxes is
17,060 + 8,406 = 74,534
• This person paid 21.3% of your original
income of $119,726 in state and federal taxes.
• This household paid 14% in federal taxes.