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Learn about the three methods used for tax calculation in the US.
Related Topics:
- Tax Calculation Method 1 Wage Bracket
Method 1 calculates the tax as a base amount for the wage bracket, plus a percentage of the excess over the base amount. - Tax Calculation Method 2 Percentage of Taxable Pay
Method 2 calculates the tax by multiplying the net taxable pay by a fixed percentage. - Tax Calculation Method 3 Percentage of Federal Income Tax
Method three calculates taxes in two stages. First, DPS calculates the federal income tax withholding. To compute the tax, DPS then multiplies the federal tax withholding amount by a fixed percentage.
Parent Topic: Tax Calculations and Methods