How Do I Figure Out My Tax Bracket?
Sign up for our FREE Monthly Email Newsletter
In addition to keeping in the financial know, you may be interested in checking your credit score and report.
¹The credit scores provided under the offers described here use the Equifax Credit Score, which is a proprietary credit model developed by Equifax. The Equifax Credit Score and 3-Bureau scores are each based on the Equifax Credit Score model, but calculated using the information in your Equifax, Experian and TransUnion credit files. The Equifax Credit Score is intended for your own educational use. It is also commercially available to third parties along with numerous other credit scores and models in the marketplace. Please keep in mind third parties are likely to use a different score when evaluating your creditworthiness. Also, third parties will take into consideration items other than your credit score or information found in your credit file, such as your income.
²The Automatic Fraud Alert feature is made available to consumers by Equifax Information Services LLC and fulfilled on its behalf by Equifax Consumer Services LLC.
³Equifax Credit Report Control™ is only available while you have a current subscription to Equifax Complete Premier. Locking your credit file with Equifax Credit Report Control will prevent access to your Equifax credit file by certain third parties, such as credit grantors or other companies and agencies. Credit Report Control will not prevent access to your credit file at any other credit reporting agency, and will not prevent access to your Equifax credit file by companies like Equifax Personal Solutions which provide you with access to your credit report or credit score or monitor your credit file; Federal, state and local government agencies; companies reviewing your application for employment; companies that have a current account or relationship with you, and collection agencies acting on behalf of those whom you owe; for fraud detection and prevention purposes; and companies that wish to make pre-approved offers of credit or insurance to you. To opt out of such pre-approved offers, visit www.optoutprescreen.com/.
4We will require you to provide your payment information when you sign up and we will immediately charge your card $4.95. After that, we will charge the card $19.95 for each month you continue your subscription. You may cancel at any time; however, we do not provide partial month refunds.
Equifax® is a registered trademark and Equifax Complete™ Premier is a trademark of Equifax, Inc. © 2014, Equifax Inc., Atlanta, Georgia. All rights reserved.
How do I determine my tax bracket?
If you’re using a tax service, your tax professional should be able calculate your tax bracket for you. If you’re doing your taxes yourself, you can consult your tax software or visit IRS.gov to find your answer.
Note that your tax bracket is not only dependent on your income but also your filing status: single, married but filing separately, or married filing jointly.
Breaking down tax brackets based on income
Your tax bracket is the percentage of tax that you pay on the highest level of your income. When someone tells you that you are in the 25 percent tax bracket, what that person really means is that part of your income is taxed at 10 percent, another part is taxed at 15 percent, and yet a third portion is taxed at 25 percent.
If all of your income is taxable, you might be able to reduce your tax bracket by making contributions to a regular IRA or a retirement plan. Get some guidance from a tax pro, and learn to take advantage of adjustments to income instead of itemized deductions.
Doing this helps you on a several levels. First of all, it reduces your adjusted gross income (AGI). In 2014, the higher your income, the fewer deductions or exemption dollars you get to keep. By reducing your AGI, you increase your deductions and exemptions.
Also, by reducing your AGI, you will increase your access to a variety of tax credits that are tied to AGI. Therefore, not only will you lower your tax bracket, you will also lower your net effective tax rate (the amount of total taxes paid divided by all of your income).
All of this planning can change dramatically if you have income that is, or should be, untaxed or partially taxed, such as Social Security income or state municipal bond interest. A small change in AGI can cause some of those things to become taxable, either directly or via alternative minimum taxes. For this reason, it might be a good idea to consult a tax pro about adjusting your AGI and tax bracket.
Eva Rosenberg, EA is the publisher of TaxMama.com ®, where your tax questions are answered. She is the author of several books and ebooks, including Small Business Taxes Made Easy. Eva teaches a tax pro course at IRSExams.com and tax courses you might enjoy at http://www.cpelink.com/teamtaxmama.
Equifax maintains this interactive forum for education and information purposes in order to allow individuals to share their relevant knowledge and opinions with other members and visitors. We encourage you to participate in discussions about personal finance issues and other topics of interest to this community, but please read our commenting guidelines first. Equifax reserves the right to monitor postings to the forum and comments will be published at our discretion. Do you have questions or comments about your Equifax credit report or customer-service issues regarding an Equifax product? If so, please contact Equifax directly. All opinions and information expressed or shared in blog comments are solely those of the person submitting the comments, and don't necessarily represent the views of Equifax or its management.