# tax bracket

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Related to Tax brackets: head of household, Tax deductions

## Tax bracket

The percentage of tax obligation for a particular taxable income.

## Marginal Tax Rate

A percentage of one's income that one must pay in taxes. Marginal tax rates vary according to income levels. One who makes \$100,000 per year has a higher marginal tax rate than one who makes \$25,000. However, the marginal tax rate does not increase for one's entire income, merely each dollar over a certain threshold. Suppose one pays 10% of one's income up to \$25,000, and 20% thereafter. The taxpayer making \$25,001 does not suddenly have to pay 20% of his/her entire income, only on the one dollar over \$25,000. That is, he/she owes 10% of \$25,000 (\$2,500) and 20% of the \$1 over that (or \$0.20). All things being equal, this taxpayer owes \$2,500.20 in taxes.

## Tax bracket.

A tax bracket is a range of income that is taxed at a specific rate.

In the United States there are six brackets, taxed at 10%, 15%, 25%, 28%, 33%, and 35% of the amount that falls into each bracket.

For example, if your taxable income was high enough to cross three brackets, you'd pay tax at the 10% rate on income in the lowest bracket, at the 15% rate on income in the next bracket, and at the 25% rate on the rest.

The rates remain fixed until they are changed by Congress, but the dollar amounts in each bracket change slightly each year to adjust for inflation.

In addition, the income that falls into each bracket varies by filing status, so that if you file as a single taxpayer you may owe more tax on the same taxable income as a married couple filing a joint return.

## tax bracket

The highest marginal tax rate to which a person or estate will be subject.Income taxes and estate taxes are calculated as a percentage of adjusted gross income, but the percentage increases as income increases. One's income is divided into brackets with an upper and lower limit to each bracket;the income within the bracket is taxed at its appropriate percentage rate,and then the next bracket is taxed at a higher percentage rate. See marginal tax rate.

The Complete Real Estate Encyclopedia by Denise L. Evans, JD & O. William Evans, JD. Copyright © 2007 by The McGraw-Hill Companies, Inc.

## Tax Bracket

The rate at which income at a particular level is taxed.
References in periodicals archive ?
The satisfaction degree of the taxpayer regarding the income tax is evaluated considering the following items: (income tax brackets and rates, income tax deductions, and income tax exemptions).
Others think the rich should certainly pay more, but that the addition of a single super-high tax bracket isn't the best solution.
However, since her ordinary income is only \$9,650, the amount of income that is taxed in the 24% tax bracket is the difference between \$9,650 and the \$4,300 that was already taxed in the 10% bracket.
This is where a taxpayer goes from a 15 percent to 25 percent tax bracket. That is a 66 percent increase.
Estimated Net Tax Benefits of Itemizing with the AMT Itemized Deductions of \$10,000 2 4 6 Exemptions Exemptions Exemptions 39.6% Tax Bracket \$759 \$3,461 \$3,724 35% Tax Bracket \$870 \$3,635 \$4,340 33% Tax Bracket \$(792) \$118 \$2,883 28% Tax Bracket \$(672) \$(672) \$(672) 25% Tax Bracket \$(600) \$(600) \$(600) Itemized Deductions of \$8,000 2 4 6 Exemptions Exemptions Exemptions 39.6% Tax Bracket \$(33) \$2,669 \$2,932 35% Tax Bracket \$170 \$2,935 \$3,640 33% Tax Bracket \$(1,452) \$(543) \$(1,452) 28% Tax Bracket \$(1,232) \$(1,232) \$(1,232) 25% Tax Bracket \$(1,100) \$(1,100) \$(1,100) Results are based on an individual married, filing jointly, and assumed AMT-allowable itemized deductions amounts of \$10,000 and \$8,000 with personal and dependency exemptions of 2, 4, and 6.
Income smoothing, avoidance of new higher tax brackets for high-income taxpayers, and managing retirement investing and drawdown sources can reap rewards in reducing tax burdens.
For example, if 40% of the converted amount reflects after-tax contributions and the client is in a 28% tax bracket, then only 60% of the amount being converted is taxed.
The basic strategy is to time your income so it will be taxed at a lower rate, and to time your deductible expenses so they may be claimed in years when you are in a higher tax bracket. In terms of investment planning, investing in capital assets may increase your ability to time the recognition of some of your income and may help you take advantage of tax rates that are lower than the ordinary income tax rates.
To determine whether to Roth, a person needs to look at his highest tax bracket (sometimes called the marginal tax rate), both while working and in retirement.
2, 2009 (CENS)--Local people will enjoy major cuts for personal income tax next year, totaling NT\$30 billion in amount, due to reduction in tax rates and increase in tax brackets.
The current proposal in Salem would add two new tax brackets for Oregonians in the economic stratosphere: 10.8 percent on joint filers' income in excess of \$250,000, and 11 percent on income above \$500,000.

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