How to Determine your Marginal Tax Bracket (MTB)

Your MTB or marginal tax rate is the rate (%) at which your last dollar (last increment) of income is taxed. Your marginal tax bracket determines how much of the earnings from savings and investments you get to keep after taxes.
To find your MTB:
1. Ask your tax preparer, or find your taxable income from last year’s return and compare to a table of tax rates for your filing status:
http://www.quicken.com/cms/viewers/article/taxes/8150 or
http://www.rce.rutgers.edu/money2000/marginaltaxbrackets2000.html
2. Consult last year’s tax return and:
Look up $ amount of your taxable income (from your return)
In tax table (in instruction booklet) find amount of tax owed (for your filing status)
Add $100 to your taxable income and find amount of tax owed
Subtract #2 from #3: The difference between the 2 numbers should be 15, 28, 31, 36, or 39.6(%) = your tax bracket.
Reminder: some of your income is NOT taxable because you can subtract your personal exemption(s) and standard deduction (or itemized deductions if > standard deduction). The first increment of taxable income is taxed at 15%; any income exceeding that amount is taxed at 28%, etc. Most taxpayers are in the 15% or 28% MTB. Taxable income is always less than total income.
Back to resources