Posted June 1, 2025

The Current U.S. Tax Structure

- How does the current Tax structure affect you?

- How will the proposed Tax structure affect you?

Feel free to contact Asher Taxation Law for further consultation or help.

The Current U.S. Tax Structure

The current U.S. tax structure is a progressive system with multiple layers, primarily administered by the Internal Revenue Service (IRS). Here's a breakdown of how it works as of 2025:

🧾 1. Federal Income Tax

🔹 Individual Income Tax (2025 Rates)

Tax rates are progressive, meaning higher income is taxed at higher rates. The brackets for single filers are:

Tax Rate

Income Range (Single)

10%

$0 – $11,600

12%

$11,601 – $47,150

22%

$47,151 – $100,525

24%

$100,526 – $191,950

32%

$191,951 – $243,725

35%

$243,726 – $609,350

37%

Over $609,350

(Ranges double roughly for married couples filing jointly)

• Standard Deduction (2025):
• Single: $14,600
• Married filing jointly: $29,200
• You pay tax only on income above deductions and exemptions.

🔹 Capital Gains & Dividends

• Long-term capital gains (held > 1 year):
• 0%, 15%, or 20% depending on income.
• Short-term capital gains are taxed at ordinary income rates.
• Qualified dividends get the same preferential treatment as long-term capital gains.

🔹 Alternative Minimum Tax (AMT)

A parallel tax system to prevent high-income earners from using too many deductions. If your AMT exceeds regular tax, you pay the higher amount.

🏢 2. Corporate Tax

🔹 Flat Corporate Tax Rate: 21%

• Established by the Tax Cuts and Jobs Act (TCJA) in 2017.
• Applies to C-corporations.

🔹 Pass-through Entities

• Income from S-corps, LLCs, partnerships passes to the owner’s return.
• Owners may qualify for a 20% Qualified Business Income (QBI) deduction, subject to income and industry limits.

🧾 3. Payroll Taxes (FICA)

Fund Social Security and Medicare:

Tax

Rate

Wage Limit (2025)

Social Security

6.2% (employee) + 6.2% (employer)

$168,600

Medicare

1.45% (each) + 0.9% surtax for high earners

No limit

Self-employed individuals pay both halves (15.3%), but can deduct the employer portion.

💼 4. Estate and Gift Taxes

• Estate tax exemption (2025): ~$13.6 million per person (double for married couples).
• Gift tax: Up to $18,000 per recipient per year without reporting.

🏛️ 5. State and Local Taxes (SALT)

• Income, sales, and property taxes vary by state and municipality.
• The federal SALT deduction is capped at $10,000, per the TCJA (still in effect).

🧮 Summary of Federal Taxes

Type

Who Pays

Key Features

Income Tax

Individuals

Progressive brackets, deductions, credits

Corporate Tax

C-Corps

Flat 21% rate

Payroll Taxes

All workers

Social Security & Medicare

Capital Gains

Investors

Preferential long-term rates

Estate/Gift

Wealthy estates

High exemption thresholds