Bullish Capital Tax Calculator
Calculate your estimated taxes with our comprehensive tax calculator. Whether you're interested in income tax, sales tax, or determining your tax return for 2024, our calculator provides accurate projections based on your inputs. Get a better understanding of your tax obligations and make informed financial decisions.
Overview of Federal Income Taxes
In the United States, income is taxed by the federal government, most state governments, and many local governments. The federal income tax system is progressive, meaning that the rate of taxation increases as income increases. Marginal tax rates range from 10% to 37%, and taxpayers can lower their taxable income through deductions and credits.
Federal Income Tax Breakdown
| Tax Type | Marginal Tax Rate | Effective Tax Rate | 2023 Taxes* |
|---|---|---|---|
| Federal | 12.00% | 8.23% | $4,108 |
| FICA | 7.65% | 7.65% | $3,818 |
| State | 0.00% | 0.00% | $0 |
| Local | 0.00% | 0.00% | $0 |
| Total Income Taxes | 15.88% | $7,926 |
Understanding Tax Terms
Marginal Tax Rate: The rate applied to the last dollar of your income. It determines how much tax you will pay on each additional dollar earned.
Effective Tax Rate: The average rate of taxation on your total income. This rate provides a better understanding of your overall tax burden.
FICA: Federal Insurance Contributions Act taxes, which include Social Security and Medicare taxes. These are split between employers and employees for W-2 employees, while independent contractors are responsible for the entire amount.
Filing Status and Deductions
The U.S. federal income tax system allows taxpayers to choose their filing status, such as Single, Married Filing Jointly, Married Filing Separately, or Head of Household. Filing status impacts your tax rates and deductions. Taxpayers can lower their taxable income through deductions, which can be standard or itemized based on eligible expenses, including state taxes, mortgage interest, and charitable contributions.
Tax Credits and Refunds
Unlike deductions, which reduce your taxable income, tax credits directly reduce the amount of tax you owe. Some common credits include the Earned Income Tax Credit, Child and Dependent Care Credit, and the American Opportunity Tax Credit for education expenses. Tax credits can be refundable or non-refundable. Refundable credits may allow you to receive a payment even if you owe no taxes, whereas non-refundable credits can only reduce your liability to zero.
How Are Taxes Calculated?
The U.S. uses a progressive tax system, where income is divided into brackets and taxed at different rates. Each dollar of income is taxed according to the bracket it falls into, leading to the calculation of federal income tax liability. For example, the first portion of income may be taxed at 10%, while higher portions are taxed at increasing rates. This way, taxpayers are only taxed higher rates on income exceeding certain thresholds.
