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To calculate your taxable income, add up all income earned in the calendar year, including items such as salary, investment gains and rental income. Your tax liability is then reduced by adjustments to income, deductions and exemptions.

Taxpayers fall into one of seven brackets, depending on their taxable income: 10%, 15%, 25%, 28%, 33%, 35% or 39.6%. Because the U.S. tax system is a progressive one, as income rises, increasingly higher taxes are imposed. But those in the highest bracket don't pay the highest rate on all their income

The top 1% of Americans, who have an average income of more than $2.1 million, pay 43.6% of all the federal individual income tax in the U.S.; the top 0.1% — just 115,000 households, whose average income is more than $9.4 million — pay more than 20% of it.

Multiply the cost of an item or service by the sales tax in order to find out the total cost. Make sure you put the sales tax into decimal form. You do this by taking the percentage and sliding the decimal point two places to the left: Example: $60 (item cost) x .075 (sales tax) = $4.5 total sales tax.

There are two kinds of taxable income: Earned income (salary, wages, tips, bonuses, commissions, etc.) and unearned income (dividends, interest, rents, alimony, winnings, royalties, etc.). For example, let's assume that Jane works for Company XYZ. Her salary is $75,000 per year.

Inheritances are not considered income for federal tax purposes, whether you inherit cash, investments or property. Any subsequent earnings on the inherited assets are taxable