What Income Bracket is the Highest for Taxes?

in All Items, Highest Taxes, Income Bracket, Tax Information

Everybody wants to pay as few taxes as they can; that’s just a fact of life. As a result, people are often curious to know who pays the highest taxes, usually in a quest to try and avoid being one of those people. Most think that the amount of taxes you will be forced to pay is based on your income bracket. While income certainly does play a role in determining the amount of taxes you owe, other factors, such as where you live, what you do for work, and how meticulously you prepare your tax returns all play a role.

As you might expect, big earners tend to pay the most in taxes. Earners in the 50th percentile, meaning those who earn more than 50% of the population, generally face the highest taxes. Most of these individuals are responsible for paying multiple different taxes as well. This doesn’t mean, of course, that you should strive to earn less if you find yourself within this group. Who would want that? What it does mean, however, is that you might want to increase your withholdings so that you don’t owe such a big chunk of money all at once or that you may want to research available deductions and take advantage of as many of them as you can.

As mentioned earlier, it’s not all about what you earn. Where you live can also play a role in determining how high your taxes will be. Currently, New York features the highest tax rates in the United States. Nearby states New Jersey and Connecticut follow, in that order, in terms of average tax costs. Obviously, you’re not going to plan a move just to pay lower taxes, but you will want to be even more mindful of your options for legally cutting tax corners.

The fact of the matter is, no matter what you do, how much you earn, or where you live, you are still going to have to pay some taxes. The only people who are exempt from taxes are some unemployed individuals, those on disability, those who live below the poverty level, and non-working students, and even then, there are some exceptions. The best thing that you can do is to accept the fact that taxes are a part of life. From there, you’ll want to do everything within your power to lower how much you have to pay, while still paying a fair and legal amount. It’s possible to find illegal and dishonest ways of paying less, but they are not worth the risk.

The average person is not going to do the best possible job on his or her taxes without some help. This is why it’s such a good idea to work with an accountant or, at the very least, a tax preparer. This is particularly important if you fall into one of these “high tax” groups or are self-employed and thus responsible for your own bookkeeping. Even if you have to pay someone to assist you, it’ll be worth it because of the money you are likely to save.

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