Income tax by definition is a tax that a state or federal government imposes on the incomes of taxpayers within their jurisdiction. Taxpayers must file income tax forms annually to determine what they owe. Typically, taxes collected on income are used to fund things like services for the public and providing goods for citizens.

Also known as the Wage and Tax Statement, Form W-2 is a document sent out by employers to both an employee on their payroll, and to the IRS. The Form reports the annual wages and taxes withheld on an employee’s paycheck. W-2s are used by taxpayers to file their federal and state taxes.

The term tax bracket is used to describe a range of incomes that are all subject to a certain rate of taxation. The United States utilizes something called a Progressive Tax System, which simply means that the rate of taxation increases as an individual’s income grows. Tax brackets are fairly complex and can be affected by whether or not a taxpayer is married and filing jointly, and exactly how much they make. But the tax rates for different incomes in 2020 are 10%, 12%, 22%, 24%, 32%, 35%, and 37%.