Marginal tax rate of 62% after I added a $12 interest income from a savings account

[georgep4055]

I added $12 in interest income from a savings account and it added $7 to my federal tax. Tried deleting and adding it back in and got the same result. Our income, married/joint return, is just over $150,000 due to cap gains and we're both over 65, so I think that additional income should get taxed at my marginal rate of about 22% and another 12% due to the reduction in the additional senior deduction, but not 62%. Tried modifying my other interest income and get the same 62% jump in taxes. Is this a flaw in the software or am I missing something big?  

[baldietax]

When you add income it may phase out some other deduction so you get a little jump in tax which for $12 income will look like a large % in tax impact; perhaps the extra income is shifting some of your Qualified Divs or LTCG into the next bracket (0/15/20%).  It's difficult to speculate, you would need to go through your 1040 line by line (and maybe Qualified Dividends and Capital Gain Tax Worksheet) to see why the tax moves $7.

[SteamTrain]

@georgep4055 

If your 1040 line 15 "taxable" income is less than 100,000?

.....IF that is the case, then the tax tables are used.....and that table works in $11-12 increments for the high end of taxable income......and $6 jumps at lower levels  (or even less)

For instance, if line 15 is between 99,000 and 99,050...the tax for MFJ is $11,614....but if you go $1 over to 99,051 on line 15, then the tax jumps $11.

Of course, the tax table isn't always used by itself...since other factors like Cap gains a Qualified dividends as a part of line 15, that can make the tax somewhat lower.

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I don't see it as being too out of bounds, especially if you add another $20 to that interest, and the tax doesn't increase any.

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If you do have other income from 1099-DIV forms, or 1099-B capital gains, then the IRS Tax Tables are not used by themselves, and the only way to see how the tax was calculated would be to find/print the tax calculations worksheets.  (the Qualified Dividends and Cap Gain Tax worksheet is most common...but it depends on exactly where all your sources of income comes from )

[SteamTrain]

Actually, looking at the Qualified Dividends and Cap Gains worksheet again.

It's a messier set of calcs than this, but essentially they subtract the Qual Dividends and Cap gains you had, from the 1040 line 15 value, and use the tax tables on the remainder  (if the remainder is under $100,001)....so just changing interest could very well be that  (edited)  ~$7 jump, since you didn't change your Cap Gains or Qual Divs from what you started with.

(And they add that tax table amount to the tax amount they figured for the Q.Divs & CapGains to get the total tax)

Tax tables for 2025 are here:

Publication 1040 (2025), TAX AND EARNED INCOME CREDIT TABLES | Internal Revenue Service