Some people are intimidated by certain tax terms. One example would be “tax bracket.” What is a tax bracket, anyway? A tax bracket simply states what you will owe in taxes according to your income. Every bracket covers a specific range of income amounts and applies a base percentage for taxes. Let’s say, for instance, that you are in the 10% tax bracket. If you earned $4000 that year, you owe $400. If you earned $7600, you are liable for $760. What about the expression “moving into a higher tax bracket?” This means that if you earn more money and exceed your bracket’s cutoff point, you will automatically move into the next bracket. Hence, you will owe a higher percentage in taxes. Would this sort of defeat the purpose of increasing your income? Not at all. If you move into a higher tax bracket, this means that you are now in two or more tax brackets. In 2016, if you earned $9275 or less, you were in the 10% bracket. Let’s give an example. Say you earned $9000. Your income taxes would be $900. You got a promotion and a raise at work (which is wonderful news). You received a whopping $3000 annual raise. Thus, your income would be $12K. This means that you would owe 10% of the $9275 (which is $927.50), and you would also owe 15% of the raised income (which calculates to $408.75. This figure comes from 15% of the pay difference between $9275 and $12000. The total owed would be $927.50 + $408.75 = $1336.25). Although taxes can be complicated, you will have zero worries when you call Rozier. We’re here to assist you with your tax challenges. Call today!