Federal income tax is levied on supplemental wages at a flat rate of 22%. Your supplemental income is subject to an additional 0.9% Medicare tax, though, if it exceeds $1 million for the entire year. Additionally, depending on where you live, you might be required to pay state income tax on your commission.
In Utah, the combined local and state sales tax rate is 6.1%, with the state rate being 4.85% throughout the state. The highest rate in the state is 9.05%, but several regions have greater rates.
In general, Utah is regarded as a tax-friendly state. Lower than the national average, it has a flat income tax rate of 4.95%. In addition, Utah has comparatively modest property taxes in comparison to other states and neither an estate tax nor an inheritance tax.
Utah does not permit a carryback of net operating losses (NOLs), but it does permit a carryforward of NOLs for up to 20 years. As a result, if your company incurs a net operational loss, you can use that loss to reduce future taxable income for up to 20 years, but you cannot use it to get a refund for prior tax years.
The following are the individual tax brackets for 2021:
– 10% of taxable income that is less than $9,950 – 12% of taxable income in the range of $9,951 and $40,525 between $40,526 and $86,375 in taxable income, 22% – 24% of taxable income in the range of $86,376 and $164,925
between $164,926 and $209,425 in taxable income: 32% between $209,426 and $523,600 in taxable income, 35% – 37% of tax-exempt income over $523,600
In conclusion, commission payments are regarded as extra wages, which is why they are taxed at a higher rate if you get them. Additionally, Utah has a flat income tax rate, a relatively low sales tax rate, and no estate or inheritance tax, making it a generally tax-friendly state. The rates of its property taxes, however, vary by area and it does not provide a NOL carryback. Finally, depending on taxable income, the individual tax brackets for 2021 vary from 10% to 37%.