Americans have been dealing with a federal income tax system since 1913, when the 16th Amendment was added to our Constitution. Every year since then, new rules, tax rates, and deductions have challenged Americans' ability to pay the lowest possible amount of tax.

What makes it even tougher is that normal life changes also affect your taxes. If in the last year, you got married or divorced, adopted or had a child, paid off a mortgage, opened a home business, or simply got a raise ... the number of exemptions claimed, your filing status, and deductions you are allowed to take will also change.
New tax breaks for 2006 (filing in 2007)

TAX RATES Your filing status determines your tax bracket; and the amount of income made during the year determines your tax rate. If you think of the five tax rates: 15%, 28%, 31%, 36%, and 39.6% as layers, you would pay zero on the bottom layer, 15% on the next layer, and so forth. The highest layer (or bracket) that your income reaches is known as your marginal rate.