Most countries follow a progressive tax system - as income increases, the % of tax payable on that incremental income also increases. It could be like: First $100 - no tax Next $100 - 10% Next $100 - 20% Next $100 - 30% Then 40% from there So if your income is $200, you pay a total of $10 as tax - and your average tax rate is 5%. If your income is $400, you pay $60 and your average tax rate is 15% and so on.
