Question

What is the tax rate for ordinary gain?

1) Taxed at regular, marginal rates
2) Taxed at a fixed rate
3) Taxed at a lower rate
4) Taxed at a higher rate

Answer 1

Ordinary gain is taxed at regular, marginal rates, which means it is subject to the United States' progressive tax system where rates range from 10% to 35% based on income.

Step-by-step explanation:

The tax rate for ordinary gain is taxed at regular, marginal rates. An individual's tax bracket is determined by their income level, marital status, family size, and other factors, which makes the United States income tax system a progressive tax. Marginal tax rates for a single taxpayer range from 10% to 35%, varying with the amount of income earned. The more you earn, the higher your marginal tax rate, with the increased rate only applying to the income earned above the threshold for the higher bracket.

For instance, if a single taxpayer earns $50,000 per year, their tax is calculated progressively through the different brackets. The first layer of income is taxed at 10%, then the next at 12%, and so on up to their top layer which might be taxed at a higher rate, but only for the income in that higher bracket. It is important to note that the marginal tax rate reflects the tax on the next dollar of income, not on the entire income.