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What is your marginal tax rate?
Old 05-27-2007, 10:13 PM   #1
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What is your marginal tax rate?

If you were to earn $1 more than you are now, what is the tax rate on that $1 where you live? For me, it's about 39% broken down as

Federal 26%
Provincial (Alberta) 10% flat tax
Employment Insurance 3%
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Old 05-27-2007, 10:24 PM   #2
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Federal 28%.
State = 7.5%
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Old 05-27-2007, 10:56 PM   #3
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15% federal plus AMT (26%?) for some of the last few dollars -- didn't hit us very hard this year, though.
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Old 05-27-2007, 11:09 PM   #4
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This is a number that I don't worry too much about. Someone with a boat load of deductions and a high marginal tax rate might still have a fairly low overall tax rate -- lower than someone else with a low marginal tax rate and no deductions.

I work hard to exercise the tax code to maximum advantage and I do a pretty good job of it. I feel pretty good about what I get for those dollars too.
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Old 05-28-2007, 03:39 AM   #5
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26% amt 10% state and local nyc
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Old 05-28-2007, 04:33 AM   #6
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The AMT 26% rate. No state/local taxes thank goodness!

I pay the 15% cap gains rate on most of my taxable income, but the AMT on most of the rest of it!

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Old 05-28-2007, 04:48 AM   #7
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not sure if you noticed but after the amt deduction is phased out to zero it makes no difference in tax rate if your married or single,its still a flat rate.

since the large capital gains came from the sale of property in my wifes name we filed seperatly and was able to at least shield my income from being hit with the amt where filing jointly everything was.
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Old 05-28-2007, 09:33 AM   #8
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Our aggregate tax rate was 16% in 2006 on $100k. Marginal is a bit deceiving because much of the income was capital gains (love that rising tide). No AMT.
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Old 05-28-2007, 10:14 AM   #9
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Feds: 15%, and we do annual partial Roth IRA conversions to get up to that limit.

State: 0%, and they owe us at least three years of rolled-over photovoltaic tax credits. Hawaii is one of the country's most tax-friendly states for retirees...
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Old 05-28-2007, 05:37 PM   #10
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Last year we got a federal refund after paying NO TAX (child tax credit).

On years I sell a rental I loose ~26-35% (depending on alt min and state impact) to taxes.
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Old 05-28-2007, 07:45 PM   #11
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According to taxtips.ca - Marginal tax rates in Canada it's only 44%. I feel blessed, a few years ago it was 52%. Of course, that's income tax only, (for you Canucks) it doesn't include EI or CPP. For you Americans, sales and property taxes are paid with after-income-tax dollars.
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Old 05-28-2007, 09:56 PM   #12
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Well, if you are paying at the Federal marginal rate of 35%, then you probably don't owe AMT since your regular rate is high enough.

If it weren't for AMT, my marginal tax rate would be 25%, and that would have been on only a small portion of my non-cap-gain taxable income, giving me an overall significantly lower average tax rate than AMT does.

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Old 05-29-2007, 12:42 PM   #13
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Federal -- 25%.
State -- 0%. (No state income tax in Texas)
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Old 05-29-2007, 01:02 PM   #14
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This may help you understand it all.
2007 Federal Tax Rate Schedules

Ours is -
Fed: 15%
State: 4.941%
Local: 2% on gross wages
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Old 05-29-2007, 01:30 PM   #15
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This year we are in the 28% marginal income tax bracket again with over $200K income, an aggregate income tax rate of 12.5%, no state income tax and no AMT.
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Old 05-29-2007, 03:22 PM   #16
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Fed - 15%
State (NC) - 7%
Assuming it is earned income - FICA/SS - 7.65%
All in, 22% unearned income, 29.65% earned income.
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Old 05-29-2007, 04:51 PM   #17
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Fed - 25%
State - 6.031%
Local - 1%
School - .5%

Combined marginal rate of 32.531%.

Sorry I looked.
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Old 05-29-2007, 08:31 PM   #18
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You're right. If those things are deductible under regular income tax, but not deductible under AMT, you're likely screwed.

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Old 05-29-2007, 08:43 PM   #19
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It's perhaps better to say that if you are paying AMT, 26% is the LOWEST your marginal tax rate would be.

I think most people count their normal tax income rate as the marginal tax rate, but if you end up paying a HIGHER tax rate due to AMT, then the AMT rate is effectively your marginal tax rate.

In my case, I would be paying 15% or 25% marginal tax rate on any given year, but capital gains conspire to make me subject to AMT, and that means I pay 26% on most of my non-cap-gains income.

In your case, your marginal tax rate is 35%. You end up paying AMT on top of that because some of your big deductions are disallowed under AMT. Even though you end up paying AMT, your last earned dollar is still taxed at 35%.

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Old 05-29-2007, 09:52 PM   #20
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Federal -- 28%.
State -- 0%.
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