Income Tax Rate
Definition:
The income tax rate is a percentage of a taxpayer’s taxable income that is paid to the government as income tax. It is a progressive tax rate, meaning that the rate increases with the amount of income earned.
Calculation:
The income tax rate is calculated based on a taxpayer’s taxable income and the applicable tax brackets. Tax brackets divide the income range into different intervals, and each interval has a different tax rate. To calculate the income tax rate, you need to find the tax bracket that applies to your income and then multiply the taxable income by the corresponding rate.
Examples:
2023 Income Tax Rates in the United States:
- 10% for taxable income up to $10,000
- 12% for taxable income between $10,000 and $50,000
- 22% for taxable income between $50,000 and $100,000
- 24% for taxable income between $100,000 and $500,000
- 32% for taxable income between $500,000 and $1 million
- 35% for taxable income over $1 million
2023 Income Tax Rate in Canada:
- 15% for taxable income up to $50,000
- 20% for taxable income between $50,000 and $100,000
- 26% for taxable income between $100,000 and $200,000
- 33% for taxable income between $200,000 and $500,000
- 35% for taxable income over $500,000
Factors Affecting Income Tax Rate:
- Location of residence
- Filing status (single, married, etc.)
- Age
- Deductions and credits
- Charitable contributions
Note: Income tax rates may vary slightly between countries and jurisdictions.
FAQs
How is income up to โน7 lakh tax-free?
Income up to โน7 lakh can be tax-free under the new tax regime due to the Section 87A rebate. If your total taxable income does not exceed โน7 lakh, you are eligible for a rebate of up to โน25,000, effectively nullifying your tax liability.
What is the Section 87A rebate for FY 2024-25?
The Section 87A rebate allows a tax rebate of up to โน25,000 for individuals with a taxable income of โน7 lakh or less. This rebate ensures that no tax is payable for individuals under this income threshold.
How much tax do I pay on a โน7.5 lakh salary in India?
Under the new tax regime, a โน7.5 lakh income is subject to a 10% tax on income between โน5 lakh and โน7.5 lakh. However, if your income exceeds โน7 lakh, you wonโt be eligible for the Section 87A rebate. Additional deductions and exemptions are not available under the new regime.
How can I pay zero tax on a โน7 lakh salary?
You can pay zero tax on a โน7 lakh salary by opting for the new tax regime. Under this regime, the Section 87A rebate eliminates any tax liability if your income is โน7 lakh or less.
