Final answer:
The federal income tax rate for supplemental wages such as bonuses and commissions up to $1 million is 22%, increasing to 37% for amounts over $1 million. Social Security tax is 6.2% and is proportional, while Medicare is 1.45% of gross annual income.
Step-by-step explanation:
The federal income tax rate for supplemental wages such as bonuses, commissions, and back pay for payments up to $1 million is 22%. However, if these supplemental payments exceed $1 million, the federal income tax rate increases to 37%. It's important to note that different types of income can be subject to various tax rates. For instance, when calculating deductions and taxes, Social Security deductions are at 6.2% of gross annual income and Medicare at 1.45% of gross annual income, while a general assumption might be to set aside 15% for federal and state taxes combined.
Regarding corporate taxes, the rate structure for a corporation results in a 34% tax on incomes between $335,000 to $10,000,000, and this rate increases to a flat rate of 35% on incomes over $18,333,333. This demonstrates how corporation tax rates can differ from individual tax rates. Additionally, the social security tax is considered to be a proportional tax since it is a flat percentage up to an income ceiling.