What rate is charge off debt taxed at?

If what you mean is if your have income from cancellation of debt, how is that taxed?

It is taxed as any other income...meaning you will pay at your "effective rate"...basically your income tax bracket.

(The one charging off the debt, normally a company, will only get, at best, their tax reduced by the amount they already paid on the income they thought they had coming....and hence "accrued" to income (as a receivable)...and now find they won't be getting/receiving.)

If what you mean is how much of a tax deduction does a company get by charging off a debt, that is more complex:

First the financial accounting requirments and the tax accounting requirements are different to allow the entry. TAX does not allow as a write off (an expense) tot he company as easily as financial. There is aomething called an "all events" test that must be met. generally it is many years after the books record the loss that the IRS will accept it for tax reporting.

TOviously, it is only acceptable as a charge against income to the degree it was reported, and tax paid on it, in some previous period. All that is happening - a previously recorded item of income is now determined to be worthless and never actually happpened. So the best case is the taxpayer gets the tax refunded that it overpaid some period before. And of course, it must have taxable income in this current period it is allowed to take it for it to even have any real effect. (Sort of doean't matter how much you lose, if your already losing money for taxes, you aren't getting to pay less than 0).