What’s My Marginal Tax Rate?

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If you don’t know what your federal marginal tax rate is off the top of your head, here ya go. This way you know how much of those bank bonuses you’ll actually get to keep. (I won’t be sending 1099s for my Emigrant Direct bonuses though, don’t worry).

Marginal Tax Rate [Taxable Income] Single Married Filing Jointly
10% $0-$7,300 $0-$14,600
15% $7,301-$29,700 $14,601-$59,400
25% $29,701-$71,950 $59,401-$119,950
28% $71,951-$150,150 $119,951-$182,800
33% $150,151-$326,450 $182,801-$326,450
35% > $326,450 > $326,450

We are safely in the 25% marginal rate. These numbers are all straight from the IRS.gov website, where you can also find your tax rate if you are married filing separately or Head of Household.

It’s interesting to note that the marginal tax rate for two single people earning $100,000 of taxable income a year are each in the 28% marginal bracket, but if they got married, they’d be in the 33% bracket. I guess that’s the ‘marriage penalty’ everyone talks about.

For state income taxes, this site is the best resource that I could find.

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  1. Taxable Income means…..

    My salary?
    the total after taxes?


  2. Taxable income = Gross income (before any taxes, etc) minus all adjustments, deductions, and exemptions.

    If you’ve done taxes before, I think this is your AGI – Adjusted Gross Income.

  3. That’s almost your AGI…

  4. Here is the 2004 California Rate Schedules

  5. You’re right, AGI does not take into account standard or itemized deductions and such. My mistake.

  6. Jane Dough says

    Great information – thanks for posting.

    However, I think you have a typo:

    25% $29,701-$71,950 $59,401-$119,950
    28% $70,951-$150,150 $119,951-$182,800

  7. Pardon my ignorance, I’ve only lived in this country a few years, but I always wondered why people would speak of tax “brackets” as if the tax rate were fixed within each bracket. Correct me if I am wrong but this is not the case, is it? The rate gradually increases with taxable income. Well, it is not continuous function, but steps are only $50 of taxable income. This are the instructions to form 1040EZ http://www.irs.gov/pub/irs-pdf/i1040ez.pdf. There is a tax table on pp. 24-32. Below is the rate table I calculated for a single tax payer:

    taxable | tax
    income | rate

    30k | 0.1414(6)
    19k | 0.131(368421052631578947)
    20k | 0.1323
    21k | 0.133(142857)
    22k | 0.133(90)
    23k | 0.134(6086956521739130434782)

    31k | 0.144(967741935483870)
    32k | 0.14825
    33k | 0.151(3)
    34k | 0.154(2352941176470588)
    35k | 0.1569(714285)

    58k | 0.19386206896551724137931034482759
    59k | 0.19481355932203389830508474576271
    60k | 0.1957(3)
    61k | 0.19662295081967213114754098360656

    68k | 0.202(1176470588235294)
    69k | 0.202(8115942028985507246376)
    70k | 0.2034(857142)
    71k | 0.20442253521126760563380281690141

    81k | 0.213(753086419)
    82k | 0.214(56097)

    As you can see the rate is gradually increasing. So I don’t understand people who seeks after writing off something else from their taxable income to descend to lower “bracket” as if it would decrease their tax rate several percentage points.
    Am I missing something in this life?

  8. savvy saver says

    Darn this marriage business… pre-marriage,I was able to get both of us down to the 15% marginal tax bracket (many, many deductions for me, standard deductions + Saver’s Credit for Hubby). Now that we are married, we are very firmly rooted in the 25% bracket due to the marriage penalty.

  9. Vlad, marginal rate works like this…

    For example:

    if you are single, and your taxable income is in the 25% marginal bracket, then you…

    pay 10% on your first 7300 earned ($730)

    and pay 15% on the amount between $7,301 & $29,700 ($3360)

    and pay 25% on every dollar above $29,700

    so you will owe $4090 + (.25 * (your taxable income – 29701))

    My math might be off a bit, but as you can see, once you make over $29,700 you are paying 25 cents on every dollar until you make $71,950, and then you pay 28 cents on every dollar above that…etc.

    I hope that helps…maybe others can explain it more clearly.

  10. Thanks Caitlin. I see the idea. Meanwhile I drew a plot of actual federal income tax rate (year 2004) over taxable income:

  11. In other words, vlad is talking about Effective as opposed to Marginal.

  12. I’ve decided I’m annoyed by the 25% rate. So I’m building an estimator that will tell me when I enter it. For the rest of the year I’ll focus on seeking capital gains and dividends. Those don’t pay such a high rate. I’m going to use the solo-401(k) to maximize deductions ($15k+), and also use the loan-to-self feature to fund capital investments. Ideally I want to get to $100k on the 401(k) as fast as possible so I can borrow $50k over five years. The “market rate” on the loan-to-self assures a pretty sound appreciation on half the balance, while the cash sits in equities. Dividends are tax-free in 2008 and cap gains are tax-free for me due to capital loss carryover. All of that beats 25% income tax rate!

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