When you want to know how to calculate your marginal tax rate there are only a few steps you need to follow. Calculating your tax rate can allow you to better plan your tax withholding from work pay checks, help you plan take home income, and create a budget that works.
- Find your tax bracket. Use any reliable search engine to find this year’s tax brackets. You’ll use this information to calculate how much tax you’ll pay this year.
- Add together all of your sources of income. You’re going to need to find your taxable income to calculate your marginal tax rate. Taxable income is your income after all of your deductions, credits, and adjustments have been removed. The short way to accomplish this is to use last year’s tax return. The taxable income is at the bottom of the form, just before your tax calculation. A longer, more accurate method would be to use software or IRS tax forms to approximate your taxable income for this year.
- Calculate your tax at each bracket. Use the tax brackets you found earlier to find your tax. The United States uses a stair-step tax bracket system. The first dollars you earn are taxed at the lowest bracket, then the next dollars are taxed at a higher rate, and later dollars taxed at an even higher rate. Therefore, figure the lowest bracket, the 10 percent tax bracket, by finding how much you earned at this bracket and multiply by .1. In 2010 the 10 percent bracket for someone filing single was from $0 – $8,375. A single person, multiplying by .1, would have $837.50 of federal tax due in this bracket. Find the next bracket’s tax, the 15 percent tax bracket, by multiplying the income in this range by .15. Continue through the brackets until you’ve accounted for all of your income.
- Add your tax at each bracket together. This is your total tax due.
- Now divide your tax due into your taxable income. This is your tax rate.
What Others Are Reading Right Now.
How to Turn (Almost) Every Lady’s Head
Top female stylists share their favorite men’s looks.
Acting, comedy and strong spirits converge in Speakeasy. When host Russell Peters interviews entertainers about all sorts of topics, neither the drinks nor the conversation is wate …
10 Red Flags That Kill Your Chances With Women
Wondering why that first date didn’t lead to a second? Read on.