How do taxes in the US work when you progressively make more money?

I'm heading that the more money you make, the more you end up paying in taxes and it has me thinking... where does the percentage of the money you owe to the government end?

For example, if I make $500,000 this year and the government takes away 50% of my income from taxes, what would happen if I make $1,000,000 next year? Will they take 100% of my income...?

And it also has me pondering the fact that when you make more money, they take more. If I wanted to legally own $1,000,000 made in a year then they'd take a percentage of it, which would mean that I wouldn't have reached my income goal in terms of owning the million dollars.

What if I made $2,000,000 in a year? Would I be owning $1,000,000 after taxes have been paid?

I hope my questions are making sense. The tax subject is fairly new to me.

2 Answers

Don Barzini Profile
Don Barzini answered

The current top federal tax rate is 39.5%. For $500k, that’s $183k. You net $317k. Extrapolate accordingly. 

There are additionally, varying state, local and source-specific taxes, like capital gains taxes, for example.

As your income increases, you rise into higher percentage tax brackets (22%, 28%, 35%) as you reach certain income thresholds. 

(I don’t have the specific increments at hand, I pay my accountant to handle such things)

All of these rates are about change under the new Tax Reform Act passed by Congress. As I understand it, lower (federal) tax rates await most brackets.

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carlos Striker Profile
carlos Striker answered

That's how it goes. It is up to you to draw the line based on your requirements? Not being hungry for money and gather items which will be no use to in the long run. The idea is live simply so that others can simply live.

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