Calculate taxes with brackets

Here is how to calculate taxes using a bracket system. In many countries, taxes are defined by brackets, where a different tax rate applies to each bracket. We can define the brackets in Python as follows:

BRACKETS = [
    (12000, 0.19),
    (20000, 0.24),
    (30000, 0.30),
    (60000, 0.37),
    (float('inf'), 0.45)]

This means that depending on the bracket, different tax rates will apply. For example:

• 🐜 For an income of 10,000, only 19% applies, resulting in a total tax of 1,900.
• 🐕 For an income of 15,000, 19% applies to 12,000 and 24% to 3,000, resulting in a total tax of 3,000.
• 🐋 For an income of 100,000, all brackets apply: 19% on 12,000, 24% on 8,000, 30% on 10,000, 37% on 30,000, and 45% on 40,000, resulting in a total tax of 36,300.

Now, let us define a function to calculate the tax:

def calculate_tax(income):
    total_tax = 0

    for i, (upper_limit, rate) in enumerate(BRACKETS):
        lower_limit = BRACKETS[i - 1][0] if i > 0 else 0
        taxable_income = min(income, upper_limit) - lower_limit
        if taxable_income > 0:
            total_tax += taxable_income * rate
        if income <= upper_limit:
            break

    return total_tax

And we use it:

total_tax = calculate_tax(income=100000)
print(f"Tax is {total_tax:.2f}")
# Tax is 36300.00

✏️ Exercises:

• Modify the calculate_tax function to return not only the tax in Euros to be paid but also the percentage of the salary.