What is Individual Tax?
Individual tax, also known as personal income tax, is a direct tax levied on an individual taxpayer’s earnings, such as wages, salaries, investments, and other types of income.
The administration of individual income tax occurs at both federal and state levels. The Internal Revenue Service (IRS) oversees federal tax collection.
Who must file an Individual Tax?
Most U.S. citizens or permanent residents who work in the U.S. have to file a tax return.
- The income is over the filing requirement
- $400+ in net earnings from self-employment (side jobs or other independent work)
- You had other situations that require you to file
- It might pay you to file even if you don’t have to.
Components of Individual Tax
A taxpayer can reduce their taxable income through deductions for healthcare, education expenses, and investments. The IRS also provides tax credits, which directly reduce the amount of tax owed.
- Tax Deductions
The IRS offers tax deductions for healthcare expenses, investments, and certain education expenses.
- Tax Credits
Tax credits help reduce the taxpayer’s tax obligation or amount owed. They were created primarily for middle-income and lower-income households.
- Filing Status
A taxpayer’s status such as Single, Married and Filing Jointly or Head of Household will determine their tax brackets and deductions.
Tax Rates
The tax rates under this type of income tax depend on the income earned and increases, the higher the income.
| Filing Status | Total Gross Income to File Taxes (Under 65 years) | Total Gross Income to File Taxes (Over 65 years) |
|---|---|---|
| Single | $14,600 or more | $16,550 or more |
| Married Filing Jointly | $29,200 or more (both spouses under 65) $30,750 or more (one spouse under 65) |
$30,750 or more (one spouse under 65) $32,300 or more (both spouses 65 or older) |
| Head of Household | $21,900 or more | $23,850 or more |
| Married Filing Separately | $5 or more | $5 or more |
| Qualifying Surviving Spouse | $29,200 or more | $30,750 or more |