Cookie Consent by TermsFeed What's the difference between income tax and payroll tax? - Insurance| Life Insurance

What's the difference between income tax and payroll tax?

What's the difference between income tax and payroll tax?
Because they both come out of your paycheck. But there are some very specific differences.

One income tax is paid on both earned and unearned income.

The amount you pay depends but it increases as your income increases the tax percentage increases the more you make And it funds many different operations so many different programs of the government whereas payroll taxes only on earned income And it's a set percentage of how much you earn. And it only funds to very specific programs.

So here's an example of a pay stub. Here you can see the gross weight ranges which is a million or a thousand dollars that's how much they've made. But then we have taxes here.

We have some deductions FICA remember that means it's one of the payroll taxes. This one's the Medicare. This one's Social Security.


Here's our federal income tax federal tax. And here's the state of California state tax so you can see here how everything gets broken down on a pay stub to represent the different types of taxes we've just talked about.

Our third type of taxes property tax.
This is a tax on property well named property such as land buildings and motor vehicles. It's determined by how much your property is worth. So the more expensive property item you have the higher your pain on tax because your property value is worth more And the amount paid depends on where you live. So there's different tax rates based on your location. So it's paid by the property owner. So if you've ever bought a car you have to go to the DMV and pay the fee to license your car. Technically that license is a technically that fee is a property tax.

Property tax is a big deal because it helps provide money for public schools.  So just remember that it also helps fund expenses of state and local governments. So again let's say it's a 2 percent tax which that the number changes based on where you live. But if you own a fifty thousand dollar house two percent of that's not as much as if you own a million dollar house. So it's just a percentage of how much your property is valued at

0 Comments