Tax Freedom Day Means Your Money is Your Own | AccountingWEB

Tax Freedom Day Means Your Money is Your Own

Each year the Tax Foundation, a nonprofit organization based in Washington, D.C., publishes its calculation of what it calls Tax Freedom Day. Tax Freedom Day is the day on which, if you were to give every dollar you had earned since January 1 to the government, you would finally have paid all of your income taxes and the rest of the money you earn would be yours to do with as you see fit.

The official Tax Freedom Day this year, based on the average taxpayer paying federal and state income taxes, was May 3, 2001. The actual Tax Freedom Day varies by state, since each state has different rules and rates for income tax, and the state in which you live can affect the federal taxes that you pay as well.

Connecticut, for example, has the highest state income tax burden in the country and as a result won't celebrate Tax Freedom Day 2001 until May 25. Residents of other states have already passed their Tax Freedom Day. Check to see when you can call your income your own on the Tax Freedom Day by State chart.

At the Tax Foundation's Web site you can study a breakdown of how tax dollars are spent and how many days you must work to pay for each facet of the federal budget.

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