You probably don’t know your tax bracket rate off the top of your head, but it isn’t hard to find out. Here’s what you need to look for.
While Congress has the power to change your tax rate, the most current information on what percentage of your income you may have to pay is widely available online at such sites as Bankrate.com and the Internal Revenue Service’s website. Currently there are six income tax brackets, ranging from 10 percent at the bottom to 35 percent at the top. The tax bracket rates are categorized into separate filing statuses to reflect those filing jointly as married couples or qualifying widow or widower; married but filing separately; single filers; and head of household.
Because of the progressive nature of taxes, predicting your tax rate for a given year or event isn’t as simple as locating the appropriate income bracket. For example, if you fall into the 35 percent tax bracket, much of your income is taxed at lower tax rates. Determining your average tax rate involves a simple division problem: Divide the tax you owe by your total income.
A good way to predict your tax situation, which can then be used to shape your financial planning, is to use a calculator. There are a variety of calculators to choose from on Bankrate.com, including the following.
- 1040 tax calculator.
- 401(k), 457 and 403(b) payroll deductions.
- Earned income tax credit calculator.
- Estate tax planning.
- Hourly paycheck calculator.
- What is your tax bracket?
- Net-to-gross paycheck calculator.
- Payroll deductions calculator.
- 125 cafeteria plan — Flexible spending accounts.
- Self-employed tax calculator.
- 1040EZ tax form calculator.