This tax structure is often considered to simplify the overall structure of the tax system by eliminating most tax deductions and loopholes. For example, an income tax system using a dual rate structure may charge 20% on all income up to $100,000 and charge 25% on every dollar of taxable income above $100,000. Therefore, if you had an income of $150,000, your tax owed would be $32,500 ($100,000 x 20% + $50,000 x 25%).