Progressive Tax - Examples

Examples

Most systems around the world contain progressive aspects. New Zealand has the following income tax brackets (as of 1 October 2008): 12.5% up to NZ$14,000, 21% from $14,001 to $40,000, 33% $40,001 to $70,000, 39% over $70,001, and 45% when the employee does not complete a declaration form. All values in New Zealand dollars and exclude the earner levy. Australia has the following progressive income tax brackets: 0% effective up to A$6000 (PAYG taxed at 15% then fully rebatable at the end of the financial year), 15% from $6001 to $25000, 30% from $25001 to $75000, 40% from $75001 to $150000, and 45% tax for any amount over $150000.

In the United States, there are five "tax brackets." ranging from 10% to 35%. used to calculate the percentage of taxable income (of individuals).

If taxable income falls within a particular tax bracket, the individual pays the listed percentage of income on each dollar that falls within that monetary range. For example, a person in the U.S. who earned $10,000 US of taxable income (income after adjustments, deductions, and exemptions) would be liable for 10% of each dollar earned from the 1st dollar to the 7,550th dollar, and then for 15% of each dollar earned from the 7,551st dollar to the 10,000th dollar, for a total of $1,122.50. This ensures that every rise in a person's salary results in an increase of after-tax salary.