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What is Federal income tax? Federal income taxes are an assessment on earnings, which are paid in the form of salaries and wages. The Federal income tax is an important revenue source for the United States as it provides funding to the government for various programs and services. Tax revenues are managed by the U.S. Department of Treasury and collected by the Internal Revenue Service (IRS).
All individuals with earned income are required to report their taxes to the IRS by April 15th of each year. The IRS collects this information on various forms it provides, based on an earnings report that has been prepared and filed by your employer.
History of Federal Income Tax
The U.S. government in 1861 levied the earliest income tax. A 3 percent tax on incomes over $800 was instituted in order to pay for the Civil War. There have been various additional taxes instituted until a Supreme Court ruling in 1895 held that such taxes were unconstitutional. This was addressed in 1913 when the states approved the 16th Amendment to the U.S. Constitution, which gave Congress the power to tax income.
Income Tax Rates
The current Federal income tax rates differ based on your filing status. Filing status for income taxes are single, married filing jointly, marries filing separately and head of household.
The tax rates for a single filer in 2009 are:
•For income of $0 to $16,700, 10 percent.
•For income of $16,701 to $67,900, 15 percent.
•For income of $67,901 to $137,050, 25 percent.
•For income of $137,051 to $208,850, 28 percent.
•For income of $208,851 to $372,950, 33 percent.
•For income of $372,951 and higher, 35 percent.
The tax rates for married couples filing jointly in 2009 are:
•For income of $0 to $8,350, 10 percent.
•For income of $8,351 to $33,950, 15 percent.
•For income of $33,951 to $82,250, 25 percent.
•For income of $82,251 to $171,550, 28 percent.
•For income of $171,551 to $372,950, 33 percent.
•For income of $372,951 and higher, 35 percent.
The tax rates for married couples filing separately in 2009 are:
•For income of $0 to $8,350, 10 percent.
•For income of $8,351 to $33,950, 15 percent.
•For income of $33,951 to $68,525, 25 percent.
•For income of $68,526 to $104,425, 28 percent.
•For income of $104,426 to $186,475, 33 percent.
•For income of $186,476 and higher, 35 percent.
The tax rates for a head of household filer in 2009 are:
•For income of $0 to $11,950, 10 percent.
•For income of $11,951 to $45,500, 15 percent.
•For income of $45,501 to $117,450, 25 percent.
•For income of $117,451 to $190,200, 28 percent.
•For income of $190,201 to $372,950, 33 percent.
•For income of $372,951 and higher, 35 percent.
Exemptions from Income Tax
Generally speaking, in the United States, all individuals and businesses are required to pay income taxes. The one main exception to this rule is non-profit organizations. A non-profit organization is any religious, charitable, school or hospital association that has organized itself in a manner and has been recognized by the IRS as being organized for such purpose.
It is accepted that non-profit organizations provide a public good for which they receive the benefit of not having to pay taxes on the money they receive. Salaries and wages paid to employees of a recognized non-profit are subject to Federal income taxes, based on the employee’s filing status.
All individuals with earned income are required to report their taxes to the IRS by April 15th of each year. The IRS collects this information on various forms it provides, based on an earnings report that has been prepared and filed by your employer.
History of Federal Income Tax
The U.S. government in 1861 levied the earliest income tax. A 3 percent tax on incomes over $800 was instituted in order to pay for the Civil War. There have been various additional taxes instituted until a Supreme Court ruling in 1895 held that such taxes were unconstitutional. This was addressed in 1913 when the states approved the 16th Amendment to the U.S. Constitution, which gave Congress the power to tax income.
Income Tax Rates
The current Federal income tax rates differ based on your filing status. Filing status for income taxes are single, married filing jointly, marries filing separately and head of household.
The tax rates for a single filer in 2009 are:
•For income of $0 to $16,700, 10 percent.
•For income of $16,701 to $67,900, 15 percent.
•For income of $67,901 to $137,050, 25 percent.
•For income of $137,051 to $208,850, 28 percent.
•For income of $208,851 to $372,950, 33 percent.
•For income of $372,951 and higher, 35 percent.
The tax rates for married couples filing jointly in 2009 are:
•For income of $0 to $8,350, 10 percent.
•For income of $8,351 to $33,950, 15 percent.
•For income of $33,951 to $82,250, 25 percent.
•For income of $82,251 to $171,550, 28 percent.
•For income of $171,551 to $372,950, 33 percent.
•For income of $372,951 and higher, 35 percent.
The tax rates for married couples filing separately in 2009 are:
•For income of $0 to $8,350, 10 percent.
•For income of $8,351 to $33,950, 15 percent.
•For income of $33,951 to $68,525, 25 percent.
•For income of $68,526 to $104,425, 28 percent.
•For income of $104,426 to $186,475, 33 percent.
•For income of $186,476 and higher, 35 percent.
The tax rates for a head of household filer in 2009 are:
•For income of $0 to $11,950, 10 percent.
•For income of $11,951 to $45,500, 15 percent.
•For income of $45,501 to $117,450, 25 percent.
•For income of $117,451 to $190,200, 28 percent.
•For income of $190,201 to $372,950, 33 percent.
•For income of $372,951 and higher, 35 percent.
Exemptions from Income Tax
Generally speaking, in the United States, all individuals and businesses are required to pay income taxes. The one main exception to this rule is non-profit organizations. A non-profit organization is any religious, charitable, school or hospital association that has organized itself in a manner and has been recognized by the IRS as being organized for such purpose.
It is accepted that non-profit organizations provide a public good for which they receive the benefit of not having to pay taxes on the money they receive. Salaries and wages paid to employees of a recognized non-profit are subject to Federal income taxes, based on the employee’s filing status.
