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What is Personal Income tax?
Personal Income Tax (PIT) is a tax on employee earnings. According to the IRS, earned income is money earned as an employee or as the owner of a business or farm.
According to the IRS, earned income is money earned as an employee or as the owner of a business or a farm. The list of taxable earned income includes the following:
- Wages, salaries, tips, employee compensation.
- Includes Union strike of benefits.
- Disability retirement benefits received prior to minimum age.
- Includes net earnings from self-employment.
- It includes interests and dividends.
- Includes strike and lockout benefits.
- Jury pay and election work pay.
- Rental, farm and business income.
Personal Income Tax Rate. Define.
Personal income tax is a taxation system that the government imposes on income generated by individuals. By law, taxpayers must file an income tax return annually to determine their tax commitment.
Personal Income Tax is direct tax
Excise duties on fuel, liquor, cigarettes are considered examples of indirect taxes. Whereas income tax is the clearest example of direct tax, since the person earning the income is the one immediately paying the tax.
Any Indian citizen aged below 60 years is liable to pay income tax if their income exceeds 2.5 lakhs. People above 60 who earns above 3 lakhs they will have to pay taxes to the Government.
Taxes levied on the earnings of companies and individuals are referred to as income taxes.Earnings like income taxes can come from diverse sources, including wages, salaries, dividends, interest, rents etc.
Indirect tax and direct tax differs in the way how they are paid. Indirect tax example are excise tax, VAT, and service tax and Direct tax examples are income tax, personal property tax and corporate tax.
The federal individual income tax has seven tax rates ranging from 10 percent to 37 percent.The rates apply to taxable income—adjusted gross income minus either the standard deduction or allowable itemized deduction