Tax law affects most areas of your life - for example, you pay sales tax, inheritance tax, property tax, capital gains tax, and more. The federal and state governments each have tax laws that are independent, and in some cases different from one another. The more assets an individual owns, the more complicated the relevant tax law becomes. A tax base is the difference between a person's taxable income for the year and the person's deductions. A person may choose to itemize his or her deductions or take the standard deduction that is provided by the federal or state government.
Tax rates are mathematical tables that determine the amount of tax that an individual owes.
Tax rates are based on income. The higher a person's income, the higher the tax rate. Presently, the highest taxable rate for income is 39.6 percent of income. Income is defined as the realization of gain. This sounds complicated, but it's really not.