What is income tax?
PF: Calculating Income Tax

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•
Mathematics
•
12th Grade
•
Hard
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1.
FLASHCARD QUESTION
Front
Back
A tax imposed by the government on individuals' earnings, including wages, salaries, and tips.
2.
FLASHCARD QUESTION
Front
What is a progressive tax?
Back
A tax system where the tax rate increases as the taxable amount increases, meaning higher earners pay a higher percentage.
3.
FLASHCARD QUESTION
Front
What is the effective tax rate?
Back
The average rate at which an individual or corporation is taxed, calculated by dividing total tax paid by total income.
4.
FLASHCARD QUESTION
Front
What is a marginal tax rate?
Back
The rate of tax applied to the last dollar of income earned, which can change as income increases.
5.
FLASHCARD QUESTION
Front
What does FICA stand for?
Back
Federal Insurance Contributions Act, which mandates a payroll tax to fund Social Security and Medicare.
6.
FLASHCARD QUESTION
Front
What is the purpose of FICA withholding?
Back
To collect funds for Social Security and Medicare programs from employees' wages.
7.
FLASHCARD QUESTION
Front
How do you calculate the effective tax rate?
Back
Effective Tax Rate = (Total Tax Paid / Total Income) x 100.
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