What is it, How it works, Types, Examples, Benefits and How to calculate ?

"Progressive Tax"

Progressive tax is a system where rate of tax increases as the income of taxpayer increases. Those who earn more pay a higher percentage of their income in taxes than those who earn less. 

What is Progressive Tax ?

Progressive tax are used by governments to fund social programs & services such as education, healthcare & social welfare. In this system, tax rates increase in steps or brackets.

How Progressive Tax Works ?

There are several types of progressive taxes including, Marginal tax rate, Graduated tax, Alternative minimum tax, Luxury tax, Capital gains tax, Estate Taxes, and Inheritance tax.

Progressive Tax Examples

Progressive tax system is to create a more equitable distribution of the tax burden across different income levels, with the idea that those who can afford to pay more should contribute more.

Purpose of a Progressive Tax

Progressive tax reduces tax burden of people who can least afford to pay. That leaves more money in pockets of low-wage earners, who are likely to spend more of it on essential goods.

Benefits of Progressive Tax

How to Calculate Progressive Tax ?

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Calculating progressive tax requires knowledge of tax brackets & their corresponding tax rates. Below is a step-by-step guide on how to calculate progressive tax.