Okay, let's say this pie represents your taxes.
Now imagine cutting that pie into multiple slices with the first slice representing all the money
you earned up to and including $53,359 – the
first tax bracket.
The second slice of pie you cut represents every dollar you earned above $53,359 up to and including $106,717 – the second tax
bracket, and so on.
$0 - $53,358
$53,358 - $106,717
$106,717 to $165,430
Marginal Taxes explained
$0 - $50,197
$50,197 - 100,392
$100,392 - $110,00
Now imagine that you have to take a piece of each slice of cake you cut (i.e. segment of income earned) and pay it to the federal government as income tax.
For the first slice of cake, which represents the first tax bracket, you would need to give 15% of that slice to the federal government in taxes.
But for the second slice of cake, you would need to give 20.5% of that slice to the federal government in taxes and so on.
Bracket 3
Bracket 1
Bracket 2
15% = $7,530
20.5% = $10,290
26% = $2,498
(i.e. segment of income earned) and pay it to the federal government as income tax.
For the first slice of pie, which represents the first tax bracket, you would need to give 15% of that slice to the federal government in taxes.
But for the second slice of pie, you would need to give 20.5% of that slice to the federal government in taxes and so on.
15%
20.5%
26.5%
Slice the pie!
Bracket one
Bracket two
Bracket three
Now imagine that you have to take a piece of each slice of pie you cut
Click the pie!
Click to see how much tax is paid
on each piece