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What is your Marginal Tax Rate?
By Jakob Jelling
Find out how much money you will get after taxes!
If you're looking to find out how much money you're going to end up paying on taxes, you should definitely find out about your marginal tax rate. This amount impacts the percentage of your income that you pay in taxes, and it can also affect most of your other financial decisions. For instance, people who are in a higher tax bracket will spend more money investing than somebody in a lower tax bracket. This may also affect the types of jobs you take, and whether or not it is actually worth it to take extra over time.
Marginal tax rates are one reason why some people actually end up not benefiting by a small raise. If you are just below a certain income bracket, then a small raise might bump you into the next tax bracket - and with the higher tax percentages, you'll end up spending more money on taxes and taking less money home than you did before.
You can find your marginal tax rate fairly easily if you know how much money you make each year before taxes. If you do not know how much you make, then you will not be able to determine how much money is going to be taken out for taxes.
One thing to keep in mind, however, is that if you do not make very much money each year (if your income is only a few thousand dollars a year) then you will not have to pay any taxes at all.
The first tax bracket is at 15%. The amounts for this tax bracket change every few years, however, so you should definitely make sure to check a recent website - or ask the IRS directly, if you're not sure. The current amount is about $27,000 - so if you make more than that amount, you may end up paying the higher tax rate of 25%, which is between about $65,500 and $27,000 currently.
There are three more tax brackets, at 28%, 33% and 35% of your income. However, the highest tax brackets are for income levels that are nearly at $300,000 a year. Make sure that you pay attention to tax rates - it's possible that these levels could change again depending on the financial situation of the country.
About the Author
Take control of your personal finances today. Please visit http://www.cashbazar.com and learn how.
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