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Marginal and Effective Tax Rates
Knowing your income tax rate can help you calculate your tax liability for unexpected income, retirement planning or investment income. This calculator helps you estimate your effective (or average) tax rate, your current tax bracket, and your marginal tax rate. Press the view report button for a more detailed look at how we calculate your tax rates and what they mean to you. This calculator uses the preliminary 2002 tax tables, subject to modifications by the IRS and changes in the tax code.
- Changes for 2002
- The tax bill passed in 2000 included some of the most complex tax code changes in U.S. history. However, the overall impact for 2002 is rather limited. In fact, in 2002, most tax payers will be impacted by only three changes.
- Increased IRA and retirement plan deductions: IRA deduction and contribution limits go up this year. Most individuals qualify for a $3,000 contribution to their IRA in 2002. Those over 50 can contribute $3500.
- The creation of a 10% tax bracket: This tax bracket is for the first $6,000 of taxable income for singles, $12,000 for married couples and qualified widow(er)s and $10,000 for head of household. The new 10% tax bracket is retroactive to January 1st, 2001. The actual tax bracket, however, is new to 2002. This is due to the fact that most tax payers received their reduced tax in 2001 through the form of a tax rebate check.
- 0.5% Lower tax rates: The rate reduction of 0.5% for all brackets above 15% produce the following rates for 2002:
|Filing Status and Income Tax Rates||Tax rate||Married filing jointly|
or Qualified Widow(er)
|Single||Head of household||Married filing separately
|10%|| $0 - 12,000 || $0 - 6,000 || $0 - $10,000 || $0 - 6,000|
|15% || $12,000 - $46,700 || $6,000 - $27,950 || $10,000 - $37,450 || $6,000 - $23,350|
|27%|| $46,700 - $112,850 || $27,950 - $67,700 || $37,450 - $96,700 || $23,350 - $56,425|
|30%|| $112,850 - $171,950 || $67,700 - $141,250 || $96,700 - $156,600 || $56,425 - $85,975|
|35%|| $171,950 - $307,050 || $141,250 - $307,050 || $156,600 - $307,050 || $85,975 - $153,525|
|38.6%|| over $307,050 || over $307,050 || over $307,050 || over $153,525|
Many of the other promised changes, including more significant rate reductions, and the elimination of the marriage penalty don't start until 2003 or later.
- Wages, salaries, tips, etc.
- This is your total income for the year. To keep things simple this calculator assumes this is your net income, after deductions for retirement contributions such as 401(k)s, IRAs, etc.
- Filing status
- Choose your filing status. Your filing status determines the income levels for your Federal tax bracket. It is also important for calculating your standard deduction, personal exemptions, and deduction phase out incomes.
- Are you someone's dependant?
- Choose 'no' if no one can claim you or your spouse as a dependant. Choose 'yes' if someone can claim you as a dependant. Choose 'both you and your spouse if you both are dependants. (You are a dependant if someone supports you and can claim a dependency exemption for you.)
- Number additional dependants
- A dependent is someone you support and for whom you can claim a dependency exemption. Each dependent you claim entitles you receive a $3,000 reduction in your taxable income. In 2002 each dependent under the age of 17 also receives a tax credit of $600. The credit is, however, phased out for higher incomes. This calculator assumes that all dependents claimed qualify for the child tax credit.
- Itemized deductions
- This is the total of your itemized deductions that you can include on schedule A of your Federal income taxes. For most people this includes state income taxes paid for the year, interest on a mortgage and any charitable contributions. Other itemized deductions include certain investment expenses, medical expenses exceeding 7.5% of your adjusted gross income, and some moving expenses.