49%
Because there are people making less than $100,000 who pay 49%.
You'll have to give me a specific state or situation that this occurs, because it seems counterintuitive to my personal experience. The most severe case of the effective tax rate (the actual taxes you pay) that I can think of is a person who files single and who is also self employed (has to pay employer and employee FICA at 15.3% total) and takes a standard deduction rather than itemizing. Let's use a WV resident as an example.
Files Single-self employed
*Gross Income: 100,000
Personal Exemption: $4050
Standard Deduction: $6350
So after personal and standard deduction a person making $100,000 per year will pay taxes on $89, 600. So if you apply the federal tax rate to this for 2017 the actual federal taxes paid will be $18,139. The federal taxes actually paid is equivalent to a little over 18%. Where people confuse the tax bracket is believing that the top effective rate for their income is what they pay on all of their wages. They don't. After deductions (and I took the absolute minimum) the person pays a graduated rate. Here's how it works...
Federal Filing Single
10%............$0 to $9,325
15%"...........$9,325 to $37,950
25%............$37,950 to $91,900
So again, on my above scenario a person grossing $100,000 after deductions will pay federal taxes of around $18,138 or a little over 18%.
Now let's look at WV state taxes...
WV State Tax
Fling Single
Personal Exemption: $2000
Standard Deduction: $0
Taxable income: $98,000
WV State taxes are graduated as well. Here's what it looks like...
For earnings between $0.00 and $10,000.00, you'll pay
3%
For earnings between $10,000.00 and $25,000.00, you'll pay
4% plus $300.00
For earnings between $25,000.00 and $40,000.00, you'll pay
4.5% plus $900.00
For earnings between $40,000.00 and $60,000.00, you'll pay
6% plus $1,575.00
For earnings over $60,000.00, you'll pay 6.5% plus
$2,775.00
So a person who makes $100,000 will pay taxes on $98,000 after personal exemption. Applying above table they will pay taxes to the state of WV in the amount of $5245. This is a little less than 5.3% of $100,000.
So...lets add it up...
Federal Taxes: $18,138
State Taxes: $5245
FICA: $15,300
Total Taxes: $38,683
That's an effective rate of between 38% to 39% for the absolute worst case scenario. If that same person wasn't self employed FICA would be cut in half (they would only have to pay half or 7.65%) and their total tax liability would be only $31,033 or just at 31%. That's a far cry from 49%.
And that was a worst case scenario. Let's look at a more traditional family of a husband, wife, and two kids that gross $100,000 and takes the standard deduction. After the standard deduction ($6350) and the personal exemptions (4 X $4050= $16,200), the family would pay income taxes on $77,450. If you apply the federal tax table for married filing jointly (different than above), the amount of taxes paid are $10,849. That effective rate is just shy of 11%.
On WV state taxes this family would have to pay state income taxes on $92,000 after the personal exemption (4 X $2000). Applying the WV tax rate for married filing jointly, the WV state taxes would be $4855. FICA would be the same. So let's add it up...
Federal Taxes: $10, 849
State Taxes: $4855
FICA: $7650
Total Taxes: $23,354 or an effective tax rate of 23.4%
So...worst case scenario 38%. Typical family scenario (with least amount of deductions because I assumed standard over itemized) at an effective rate of a little over 23%.
Again...the 49% scenario seems counterintuitive so you'll have to give a specific situation. Even with city/local taxes I can't imagine reaching that number on $100,000 per year.
