topic tax rate computation in Retirement tax questions

tax rate computation

shengjiachi — Mon, 17 Mar 2025 14:33:28 GMT

THE TAX DUE USING THE BLENDED TAX RATE IS HIGHER THAN THE TAX COMPUTED WITH THE IRS TAX RATES. WHY?

Re: tax rate computation

DianeW777 — Mon, 17 Mar 2025 14:52:45 GMT

It depends. A blended tax rate, also known as the effective tax rate, is arrived at by any 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, wages or self-employment, this may all play a role in determining your blended tax rate.

It's a calculation based on overall income and the amount of tax calculated on the tax return and is not specifically a marginal or capital gains tax rate or the specific rate based on your taxable income. Keep in mind the tax rate is graduated and begins at zero and rises based on filing status and income levels.

Federal Tax Rates and Brackets

Re: tax rate computation

SteamTrain — Mon, 17 Mar 2025 15:12:27 GMT

@shengjiachi

If you have ANY Self-Employment income....that is taxed at ~15% for SS and Medicare taxes......BEFORE the regular income tax is applied. So, the blended rate of your Regular income tax plus the SE tax can bump the blended rate waaaay up.