FAQs: Marginal Tax Rate

February 22, 2019

“What’s the maximum wage can I make before I get moved to the next tax bracket?” is a question our preparers get asked all the time.

What many clients do not understand is The United States uses a progressive tax system and utilizes marginal tax rates. For consumers this means that every dollar you make within a given tax bracket is taxed at the assigned rate, never a higher one. For example, if your filing status is “single” and you made $35,000 in 2018, $9,525 of your income would be taxed at 10% and the remaining $25,475 would be taxed at 12%.

Our preparers want taxpayers to understand they should never let taxation stop them from making money. If you have made $82,500 in the past and are hesitant to take a higher wage for fear of having all of your income taxed at 24%, remember, only those dollars that fall in the next tax bracket will be taxed at 24%.

See below for the 2018 Tax Brackets and Rates:

Rate

Individuals

Married Filing Joint

10% Up to $9,525

Up to $19,050

12% $9,526 to $38,700

$19,051 to $77,400

22% $38,701 to $82,500

$77,401 to $165,000

24% $82,501 to $157,500

$165,001 to $315,000

32% $157,501 to $200,000

$315,001 to $400,000

35% $200,001 to $500,000

$400,001 to $600,000

37% over $500,000

over $600,000

   

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Email: Storen@StorenFinancial.com