TAX PERCENTAGE

I am looking at the change in my taxes when I make a small adjustment to interest income. Why when I am in a 22% bracket does it look like I'm being taxed at 50% for this additional income. $800 in interest income makes a $400 difference in taxes. Why??

posted

When you add income to your tax return, your taxable income and tax liability increase. But at the same time, other things such as income based credits (earned income credit for example) can go down, thus creating a larger than expected increase in your tax liability.

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