Monday, February 11, 2019

Income Taxes - How they fall into the brackets

People are often confused about how their income is taxed. The tax slabs that one falls into is sometimes wrongly thought to be as absolute (as in I make X$ , and I fall into 25% bracket, so my taxes will be X * 0.25 ).Sometimes people mistakenly think making a little bit of more money will result in a larger tax burden, and hence refuse to get that promotion/bonus etc(this admittedly could be an urban legend). This plot illustrates how the taxes are actually distributed into the slabs for 2018 and 2019, and shows the effective tax rate and each Income Point.

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