As your earnings increase throughout the year, you generally move from one tax bracket to the next as your income grows.
Your marginal tax rate is the highest tax bracket that you are taxed in as your income grows throughout the year.
The actual percentage of your total income at the end of the year that gets paid to the IRS as taxes is generally different, and is usually referred to as your effective tax rate.
The rate you pay on the last earnings you make, which is your highest marginal tax rate or top marginal rate, is usually much higher than your effective tax rate.
There are many different tax numbers, brackets and rates used for many different applications for a multitude of reasons. It's easy to confuse them. Make sure you are comparing the same rates from year to year.
You can reduce your taxable income using your standard deduction or by itemizing deductions.
You can reduce the tax you owe if you qualify for credits, including the Child and Dependent Care Credit, education tax credits, and adoption tax credit. These credits reduce the taxes you owe dollar for dollar.
Click here for additional information on tax brackets.
Click here for information on lowering your effective tax rate.
Please feel free to come back to TurboTax Community with additional information or questions or click here for help in contacting Turbo Tax Support.
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