Download Personal Income Tax

Personal Income Tax:
How I Learned to Stop Worrying and Love the US Government
Pete Shaheen circa 1985

His first year at Seaholm Mr. Shaheen
made $37,500
Gross Income

Did Mr. Shaheen make at least $9,075?

Yes!

So we figure out 10% of the big number:
$9,075 – 0 = $9,075

$9,075 * .1 (10%) = $907.5

Put this is the box for taxed amount at
10%
Marginal tax rate of 10%

Did Mr. Shaheen make at least $36,900?

Yes!

So we figure out 15% of the big number:
$36,900 – 9075 = $27,825

$27,825 * .15 (15%) = $4,173.75

Put this is the box for taxed amount at
15%
Marginal tax rate of 15%

Did Mr. Shaheen make at least $89,350?

No!

So we figure out the difference of the last
amount we paid in tax ($36,900) and the his
pay ($37,500)

$37,500 – $36,900 = $600

$600* .25 (25%) = $150

Put this in the box for taxed amount at 25%
Marginal tax rate of 25%

Add the three numbers together:
$907.5
$4,173.75
+$150
$5,231.25
Put this into total tax
Total Federal Tax

SS is 6.2% of your total income up to
$117,000.
◦ If you make more than 117,000 you pay 6.2%
of 117,000. If you make less you pay 6.2% of
your income.

Medicare is 1.45% of your total income no
matter what you make
SS and Medicare

SS
◦ 37,500 * .062 = $2,325.00

Medicare
◦ $37,500 * .0145 = $543.75

Add these up for your total burden
SS and Medicare

Much like Medicare, this is a simple tax of
4.35% of your total income:

$37,500 * .0435 = $1631.25
State Income Tax

You spend about 30% of your income on
things that have sales tax, which is 6%:

$37,500 * .3 = $11,250

$11,250 * .06 = $675
Sales Tax

Add all these numbers together!
◦
◦
◦
◦
$5,231.25
$2,868.75
$1,631.25
+$675.00
◦ $10,406.1
◦ What percent is that, of his total income?
Total Tax Burden