MonikaK1
Expert Alumni

Get your taxes done using TurboTax

The blended rate you are looking at may only be considering your regular income tax and not your self-employment tax.

 

A blended tax rate, also known as the effective tax rate, is derived from a number of factors. The effective tax rate for individuals is the average rate at which their earned income, such as wages, and unearned income, such as stock dividends, are taxed. If you received income from a variety of things like stocks and bonds, interest, dividends, or self-employment, they may all play a role in determining your blended tax rate. See this thread for another discussion of this issue.

 

If your taxable income falls into the 22% bracket, that is actually your "marginal tax rate" - you are taxed at that rate on the portion of your income that falls into that bracket, and the portion under that amount gets taxed at lower rates.

 

For 2022, married filing jointly, the 22% rate covered taxable income from $83,550 to $178,150.

For 2023, married filing jointly, the 22% rate covers taxable income from $89,451 to $190,750.

The lower brackets also changed for 2023, so the overall calculation has changed.

 

In other words, your marginal tax rate refers to the tax rate on the last dollar of your taxable income, or the highest tax bracket you fall under. For example, if you're a single filer earning a taxable income of $75,000, your marginal tax rate would be 22% for the 2023 tax year. See this tax tips article for more information.

 

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