Tax Rate

AAA

DEFINITION of 'Tax Rate'

The percentage at which an individual or corporation is taxed. The tax rate is the tax imposed by the federal government and some states based on an individual's taxable income or a corporation's earnings. The United States uses a progressive tax rate system, where the percentage of tax increases as taxable income.

INVESTOPEDIA EXPLAINS 'Tax Rate'

A tax rate is the percentage of an individual's taxable income or a corporation's earning that is owed to the state, federal and in some cases, municipal governments. In certain municipalities, regional income taxes are also imposed, increasing the tax burden for those residents.


The dollar threshold for each tax rate is dependent upon the status of the filer (such as single, married filing separately, married filing jointly and head of household).


The term tax rate can also refer to other occasions where taxes are imposed. Examples include sales tax on goods and services, real property tax, short-term capital gains tax rate and long-term capital gains tax rate.

RELATED TERMS
  1. Income Tax

    A tax that governments impose on financial income generated by ...
  2. Federal Income Tax

    A tax levied by the United States Internal Revenue Service (IRS) ...
  3. Tax Incidence

    An economic term for the division of a tax burden between buyers ...
  4. Income Tax Payable

    A type of account in the current liabilities section of a company's ...
  5. Internal Revenue Service - IRS

    A United States government agency that is responsible for the ...
  6. After-Tax Income

    The amount of money that an individual or company has left over ...
RELATED FAQS
  1. What is the difference between disposable income and discretionary income?

    Disposable and discretionary income are two different measures used to analyze the amount of consumer spending. Both are ... Read Full Answer >>
  2. What are some of the arguments in favor of a value-added tax (VAT)?

    A value-added tax (VAT) offers several advantages over an income tax or traditional sales tax. It raises needed government ... Read Full Answer >>
  3. How is compound interest taxed?

    Compound interest is money that is earned and added to a principal balance and then earns additional interest. Adding interest ... Read Full Answer >>
  4. According to the law of supply and demand, what is the effect of an increase or decrease ...

    Standard economic analysis shows that taxes of any form, including income taxes, tend to cause deadweight loss in the market. ... Read Full Answer >>
  5. How does the Fair Accounting Standards Board (FASB) regulate deferred tax liabilities?

    The Financial Accounting Standards Board (FASB) requires that deferred tax liabilities be recognized whenever there is a ... Read Full Answer >>
  6. What cost basis reporting rules are set by the Internal Revenue Service (IRS)?

    In accounting and tax terms, cost basis refers to the price paid for an asset. It's an important calculation for all businesses ... Read Full Answer >>
Related Articles
  1. Taxes

    Preparing For Retirement Plan RMD Season

    Paying taxes is inevitable - that's why you need to learn about the rules for required minimum distributions.
  2. Retirement

    Traditional IRA Deductibility Limits

    Find out where you can take a tax deduction on the contributions you make.
  3. Taxes

    6 Important Retirement Plan RMD Rules

    Paying taxes is inevitable - that's why you need to learn about the rules for required minimum distributions.
  4. Taxes

    Paying Uncle Sam: From Tobacco To $1 Trillion

    The services we rely on, like education, law and security, were built on taxes.
  5. Retirement

    Some Tax Considerations For Your Retirement Income

    Even if you don’t plan to retire, it’s still a good idea to think ahead about where to live, your income and how it all interacts with Social Security.
  6. Taxes

    What is Withholding Tax?

    Withholding tax is the income tax federal and state governments require employers to withhold from employee paychecks.
  7. Taxes

    OK, So I'll Be Smarter Next Tax Time

    5 tax resolutions to start on right now for a smoother tax return next April 15.
  8. Taxes

    What To Do If You Lost Your W-2

    There's no need to panic if you don't have your Form W-2 to file taxes, there are easy ways to gain access to the missing form or file without it.
  9. Taxes

    Will Itemized Deductions Get You A Bigger Refund?

    April and taxes are due soon. If you need to file your return, you might have to decide if itemizing your deductions this year will net you a better deal.
  10. Credit & Loans

    6 Ways To Build Credit Without A Credit Card

    It's definitely possible – if a bit more complicated – to build a credit history without traditional credit cards. Just follow these steps.

You May Also Like

Hot Definitions
  1. Venture-Capital-Backed IPO

    The selling to the public of shares in a company that has previously been funded primarily by private investors. The alternative ...
  2. Merger Arbitrage

    A hedge fund strategy in which the stocks of two merging companies are simultaneously bought and sold to create a riskless ...
  3. Market Failure

    An economic term that encompasses a situation where, in any given market, the quantity of a product demanded by consumers ...
  4. Unsystematic Risk

    Company or industry specific risk that is inherent in each investment. The amount of unsystematic risk can be reduced through ...
  5. Security Market Line - SML

    A line that graphs the systematic, or market, risk versus return of the whole market at a certain time and shows all risky ...
  6. Tangible Net Worth

    A measure of the physical worth of a company, which does not include any value derived from intangible assets such as copyrights, ...
Trading Center