Let's assume your annual taxable income is $40,000. As a single guy, the first $26,250 is subject to the 15% federal income tax rate, according to the tax code. That's $3,938. The $13,750 remainder "graduates" to the 28% rate, or $3,850. Your total tax then is $7,788 (3,850 + 3,938). Using ballpark figures, if you get paid twice a month, around $324 should be withheld from your check each week for federal tax.But if you just took a flat 28% of $40,000, you'd get $11,200 in taxes, much more than the graduated amount.
Are Bonuses Taxed at a Higher Rate? No.
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