Marginal Income Tax Bracket

What is it? Taxpayers can fall into five marginal tax brackets: 15%, 28%, 31%, 36% and 39.6%. This means that your last dollar is taxed at that rate. This doesnt necessarily mean that your entire income is taxed at that rate, though. Instead, every American pays the same percent on the same amount of income. For instance, an individual making $50,000 a year would pay 15% on the first $25,750, just like everyone else, then 28% on the rest. (You can find your marginal rate in our tax rates area.) It can be important for you to know your marginal rate when making investment decisions. For instance, taxable bonds may make sense for someone in a lower tax bracket, while tax-free municipal bonds may make sense for people in higher tax brackets since their tax savings more than offset the lower interest rates these bonds tend to offer.

Added By: Faith

Send To Friends!

If you'd like to send the Marginal Income Tax Bracket definition to yourself or to your friends/colleagues, just enter the e-mail addresses in the boxes below -

We hope you now understand the meaning of Marginal Income Tax Bracket. If you need any more information on this term, please don't hesitate to contact us.