Tax bracket

Tax bracket is a system of taxation by a government that assigns various income groups their own tax rates. The rate of tax depends on the level of annual salaries. This provides governments the flexibility to raise or lower taxes based on its economic and political agenda. For example, a 10% tax rate would be applicable to those who only earn up to $20,000 annually while a 48% tax rate would apply to those who earn over $500,000 a year.