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Glossary entry · The silent subtractors
Tax bracket
Definition
Income tax is split into ranges, each with its own rate. As your income rises, the part inside each higher range is taxed at that range's rate, but the lower parts keep paying their lower rates. That is why moving up a bracket never reduces your take-home pay overall.
Example
If brackets are 20% up to €12,570 and 40% above, earning €15,000 means 20% on €12,570 and 40% only on the extra €2,430.
Related
The silent subtractors
Fee
A charge taken from your investment by a fund, broker, or advisor, every year, forever.
Read →Tax
The other silent subtractor. Almost every gain you make is taxed somewhere.
Read →Expense ratio
The annual fee a fund charges, expressed as a percentage of your investment.
Read →Commission
A fee charged by a broker each time you buy or sell. Mostly $0 with modern brokers.
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