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Business & farm
Different sources of income are taxed at different rates. For example (one of many) if you sell rental property the recaptured depreciation is taxed at a minimum of 15% and a maximum of 25% regardless of what tax bracket you may fall in to.
Likewise, your earned income (reported on W-2) is taxed incrementally. For example, for a person filing single the first $9,525 is taxed at 10%. Then from $9,526 to $38,700 is taxed at 12%. Then from $38,701 to $82,500 is taxed at 22%.
So if you earned $60K on a W-2 for the entire tax year, the taxes on that will be $9,139 and the "blended" tax rate will be 15.2%
‎August 6, 2019
9:02 AM