I keep hearing the same statement from taxpayers that makes little sense: “I cannot afford to make more money because it will raise my taxes.”

What they are saying is that they believe that if they make more money, all their income will be taxed at a higher rate. This is false. We have a graduated income tax.

First, not all of the income is taxed. In fact, not all income is counted toward determining the taxable income. Some income is considered non-taxable.

For example, for South Carolina residents, interest income from South Carolina bonds is not considered income in South Carolina or for federal taxes. Other interest income, such as interest from U.S. bonds, is taxable at the federal level but excluded from income at the state level. There is a variety of income which is not taxed.

But anyway, that is not the answer. Let’s look at income that might be taxed. For most people, it is wages or self-employment income or retirement income, savings and investment income. You add it all up and come up with a number.

From there you make adjustments, deductions that Congress believes should be taken from the gross income. These include one-half of the payroll taxes for self-employed people, certain education credits, inducements for putting money into IRA or SEP accounts and similar deductions.

Once these are completed, you have what is called your AGI or adjusted gross income.

Every taxpayer gets either a standard or itemized deduction. This is to compensate for living expenses and certain extra costs. Itemized deductions include medical, charitable, mortgage interest and taxes paid.

There are deductions for business expenses relating to a job and certain other expenses incurred in trying to increase taxable income.

I know you can argue about mortgage interest when paying a mortgage may be less than paying rent on the same property. Congress determined that residential ownership is preferable to renting and modified the tax laws to achieve this goal.

After taking out the deductions, you are allowed an exemption per person for being alive for part or all of the year. What is left is taxable income. And that is where the graduation begins.

I am single. For the first $9,225 of taxable income, I will pay the U.S. Treasury 10 percent in Federal income tax. If I make between $9,226 and $37,450 in taxable income, I will pay 10 percent tax on the first $9,225 and 15 percent on the income from $9,226 and $37,450.

So, for example, let me make $20,000 in taxable income. I will pay $922.50 toward the first increment and 15 percent of the balance of $10,775 or $1,626.25 in Federal taxes, for a total of $2,538.75 on $20,000 of taxable income.

This means I am in the 15 percent tax bracket with a marginal tax bracket of slightly over 10 percent.

Thus if you make more money, only the additional money may be taxed at a higher rate, not the total income.

Virginia Moryadas is a tax preparation professional in Bluffton.