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I reported \$20 on my 1099-INT and my refund changed by \$12. Given that I am in the \$87,001 - \$180,000 bracket, I should be taxed at 37%. Why am I taxed \$12 and not \$7?

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Level 7

I reported \$20 on my 1099-INT and my refund changed by \$12. Given that I am in the \$87,001 - \$180,000 bracket, I should be taxed at 37%. Why am I taxed \$12 and not \$7?

The likely explanation is due to the way the tax table itself works.  It is not a straight percentage, but rather a graduated rate, where every \$50 of income results in additional tax due.  Its possible to see a small amount of interest push you over into the next \$50 bracket, which then causes an increase in tax liability.

For example, a single taxpayer with \$87,140 in taxable income would have a tax liability of \$17,520.  But, by entering \$20 in additional income for a taxable income of \$87,160, that same taxpayer would now have a tax liability of \$17,533 - a \$13 increase. It might be easiest to see if you look at the tables themselves at the link below -

Level 7

I reported \$20 on my 1099-INT and my refund changed by \$12. Given that I am in the \$87,001 - \$180,000 bracket, I should be taxed at 37%. Why am I taxed \$12 and not \$7?

The likely explanation is due to the way the tax table itself works.  It is not a straight percentage, but rather a graduated rate, where every \$50 of income results in additional tax due.  Its possible to see a small amount of interest push you over into the next \$50 bracket, which then causes an increase in tax liability.

For example, a single taxpayer with \$87,140 in taxable income would have a tax liability of \$17,520.  But, by entering \$20 in additional income for a taxable income of \$87,160, that same taxpayer would now have a tax liability of \$17,533 - a \$13 increase. It might be easiest to see if you look at the tables themselves at the link below -