Federal Tax Rate Too Low?

[mrodriguez33]

Hey everyone! When I google the Federal tax rate for 2016 for taxable income of 33k it shows that it should be 15%. However, when I do my taxes using TurboTax, once I am all done keying in the data, TurboTax is saying my effective tax rate is 9.42%. How can this be when $0 to $9,275 income is 10% interest. I want to be sure I'm doing this right or perhaps an error on TurboTax's end. (https://www.bankrate.com/taxes/2016-tax-bracket-rates/) 

My Adjusted Gross income was 37,010.00 and taxable income is $26,660.00. I did have taxes withheld as I had worked for a bank. Federal income that was withheld was 4104.43, not sure if this lowers the tax rate?

[xmasbaby0]

2016?    Please explain what you are trying to do.   The online program is only for 2020 returns.   Software is no longer available for 2016.

[mrodriguez33]

You are able to download previous years to file your taxes as well such as 2016, 17, etc. However, the year isnt really relevant to the question. The answer most likely is the same for all years. What I'm trying to do is my taxes but online Federal taxes is stated at 15% (based on this source and many others, https://www.bankrate.com/taxes/2016-tax-bracket-rates/) but TurboTax is filing mine as 9.42% and I want to be sure this is correct and if it is how can this be? I understand that investments and certain expenses can reduce your taxable income but is it possible to have a lower Federal tax rate even though the bracket I'm in, it says it should be 15%? 

[Critter-3]

Although your income might be in the 15% tax bracket our tax system is a graduated taxing system so everybody pays zero tax on some income and 10% on some income then 15% etc etc. So you're blended rate is what the program is showing you. Since you must be using the downloaded version of the program switch to the forms mode and look for the worksheet that shows how the taxes were calculated. If you had qualifying dividends and or long-term capital gains then you're being taxed at a lower rate so look for the capital gains worksheet.

[SteamTrain]

@mrodriguez33 

Try not to confuse marginal tax bracket (15%) with "Effective" tax rate.

The 15% Marginal tax bracket is the tax applied to the highest part of your "taxable Income"....i.e. after all your deductions and exemptions are applied.

The Effective tax number is just supposed to be a TTX-supplied feel-good, hand-waving calculation, that show's (approximately) the % resulting from the total taxes you were assessed/divided by ALL your income (before deductions or exemptions were subtracted).