Reply to My household gross income is 105K. What is the next tax bracket?

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[quote=Anonymous][quote=Anonymous]I don't think you really understand how tax brackets work.  Only the marginal income is taxed at the higher rate.  [/quote]

I think you probably need to explain that even more clearly to OP given the ignorance.

OP, what "marginal rates" means is only the income above the prescribed amount is taxed at the marginal rate.

But to answer your question:

You have $105,000 gross income you said. Didn't see whether you were married or not. But let's assume you have basic exclusions for retirement contributions and health insurance premiums provided by your employer and maybe a flexible spending account. Say those add up to $15,000 total. Now you're down to $90,000. Then let's say you claim the standard deduction.

If you are single, you get a $12,000 standard deduction from the $90,000. So your taxable income is $78,000. The first $9,525 of that is taxed at 10% (so, $952.50 in tax); the amount between $9,526 and 38,700 is taxed at 12% (so $3,500 in tax); the rest of your income is taxed at 22% (so, $8,646 in tax). Total tax is: $13,098. And if you have any children, subtract $2,000 per child from that amount.

The next tax bracket kicks in a $82,501 of TAXAABLE income. So, you could earn another $4,000 or so before going into the next tax bracket. And in that case, income above $82,501 only would be taxed at 24% until your taxable income exceeded $157,500. So basically, it would be a 2 percentage point increase on the income between $82,500 and $157,500 of TAXABLE income (i.e. the income you have left after your exclusions and deductions). [/quote]

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