Your 2023 effective tax rate

[skyking1]

We have no mysteries to solve here. DW plugged 30K in her 403B maxing it out. I am in a defined pension and don't have access to my employer's 401K. We can't dodge any of it until we get done working. Next year she may retire after that maxed out contribution. Won't that be grand?

 

[OnTheBeach]

I will be on extension so I won't have my 2023 return till October.
Federal Effective Tax Rate:
2021: 26.5%
2022: 24.2%

 

[TheWizard]

I will be on extension so I won't have my 2023 return till October.
Federal Effective Tax Rate:
2021: 26.5%
2022: 24.2%

That's a rather high effective rate.
You must be quite wealthy.

 

[RunningBum]

2.1%, mostly because I had to pay back some of the ACA subsidy. Otherwise it would have been 0.6%.

 

[target2019]

2019-2023 effective tax rate by TurboTax:
8.54, 7.62, 7.38, 10.74, 10.19.

 

[jfn111]

Fed tax rate of 13.1% for 2023.

 

[BrianB]

For 2023, our rate was
7.9% Federal
1.3% State
9.2% Total.

2023 was our last year using the ACA. For the next 7 years we'll be paying more as we crank up Roth conversions ahead of RMD's.

Our plan is to convert as much as possible each year while keeping our Total tax rate under 15%.

BrianB

 

[NanoSour]

18.9% as I finish up Roth conversions. 2024 will be our last conversion year, then it should settle down to the 3% range until SS at age 70.

 

[lemming]

My rate for federal was 11.56 percent. Standard deduction. Took out more from my IRA than the year before which may have bumped me out of a tax break for capital gains. I hope it was not so high that my medicare premium will be higher. (checked that-it should not change)

 

[Rianne]

This is how I understand it:
Effective tax rate is line 24 total tax / line 15 taxable income - 16%

Marginal tax rate is line 24 total tax / line 9 total income. This determines whether you pay more for Medicare. Correct? 7.5%

 

[USGrant1962]

This is how I understand it:
Effective tax rate is line 24 total tax / line 15 taxable income - 16%

Marginal tax rate is line 24 total tax / line 9 total income. This determines whether you pay more for Medicare. Correct? 7.5%

No, effective tax rate is your second calculation: total tax (line 24) / total income (line 9). Though to be precise you should add tax exempt income to line 9.

Marginal tax rate is what you are taxed on the last dollar you earned - usually 10%, 22%, 24%, etc. (aka tax brackets), but there are lots of wrinkles in marginal tax rates.

IRMAA for Medicare is based on your modified AGI - line 11 plus tax exempt interest and dividends.

 

[Rianne]

No, effective tax rate is your second calculation: total tax (line 24) / total income (line 9). Though to be precise you should add tax exempt income to line 9.

Marginal tax rate is what you are taxed on the last dollar you earned - usually 10%, 22%, 24%, etc. (aka tax brackets), but there are lots of wrinkles in marginal tax rates.

IRMAA for Medicare is based on your modified AGI - line 11 plus tax exempt interest and dividends.

Thanks!

 

[Retire2023]

2023 Effective rates:
Fed 9.14% ... 10.55% including ACA payback
St. 4.06%
Total 10.55%...14.61% when ACA payback included

Stilling trying to balance Roth conversions with ACA amounts. Only two more years to deal with that mess!

 

[disneysteve]

According to the report from our CPA, our 2023 effective tax rate was 8%.

 

[Koolau]

Finally got stuff back from CPA. 5.3% Fed and 0.0% state this year. Big refund applied to next year to avoid quarterlies (big income changes in '24!)

 

[EarlyandLate]

Fed tax 0, state tax 0
I got the Energy tax credit for my new heat pump. That wiped out my Fed tax. Georgia has reasonably generous income exemptions for retirees. I think this will be my last year of paying 0 tax.

 

[38Chevy454]

Finally getting taxes done. Need to sit on it a few days and then do review again, but latest numbers:
Fed 14.11%
OH 2.76%

 

[Closet_Gamer]

Still waiting for the tax team to send me the total damage. Will share. It won’t be pretty.

Each year I also calculate my taxes/net worth.

I find this an interesting metric and it shows me how effectively I am keeping the tax man at bay in terms of really dragging my wealth creation. You can have a big % of income go to the tax man, but if you are growing assets in tax deferred structures and being tax efficient in your brokerage accounts, you can still grow wealth quickly.

Quoting my own post ...

My effective income tax rate last year (Fed, State, Local, FICA, Medicare) was 34.3%

This is from my last year of work and we're fortunate to have good financial situation but, wow. Just wow.

To my second point, it works out to a
3.6% tax rate vs. assets
4.7% tax rate vs. net worth.

So, between the 65% of income that I kept and the growth of assets/div/interest, I still had a very good year!

 

[38Chevy454]

Finally getting taxes done. Need to sit on it a few days and then do review again, but latest numbers:
Fed 14.11%
OH 2.76%

Edit, revised numbers after review and adding in a 1099-R I forgot first time
Fed = 15.22%
OH = 2.87%

 

[breakaway]

[FONT=&quot]Effective Tax Rate = [/FONT]18.07%​

 

[someguy]

These kind of threads depress me when I see all these other FIRE'd folks report.

Using the Line 24 / Line 11 methodology, for 2022: 18.2%

Semi-retired; Just under 30% if it makes you feel any better. And that's maxing out both solo 401(k)s ($132K).

 

[523HRR]

No, effective tax rate is your second calculation: total tax (line 24) / total income (line 9). Though to be precise you should add tax exempt income to line 9.

For 2023:

Total Tax (Line 24) / Total Income (Line 9 + Tax Exempt Income Line 2a) = 25.3%

 

[albireo13]

19%
ugh

 

[Oilcan]

Just picked up tax from CPA with effective tax rate: 21.49. Down by 1 from 2022.

 

[Rocky mtn high]

Line 24/line 11. 11%. This is with Roth rollover, love that rollover