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Tax Bracket: How to find out my tax bracket using TurboTax?

For example, for Married Filing Jointly, the annual taxable income is $100,000, so this should indicate that the tax bracket is 22%, since it is in the range of $81,051 to $172,750. However, when I use a hypothetical number of 101,000 (i.e. increase of $1,000 in ordinary income), the resultant tax calculated is not $220 (instead, it’s actually $270!). Does that mean I do not use the software correctly? Please help me, thanks!!

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1 Reply
BillM223
Expert Alumni

Tax Bracket: How to find out my tax bracket using TurboTax?

You are correct to think that the tax bracket indicates your marginal tax rate. That is, if you increase your taxable income by $1,000, that your tax should increase by $220 in the 22% tax bracket.

 

HOWEVER, there are 47 million things going on when you increase or decrease your taxable income. For example, qualified dividends and capital gains are not taxed the same way as ordinary income. If you cross a boundary in how these are taxed, your tax will not increase in a linear manner. 

 

Also, there are a number of limitations that reduce deductions and credits starting in the general neighborhood of $100,000. 

 

Simply, there are too many things that could be happening for us to know what is happening on your return, since we cannot see your private tax data here in the Community. Just keep your eyes open to see if something else changes along with your income and the tax.

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