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Why am I getting a blended tax rate of 15%?

Last year I had a total income of $19,176 and got a tax rate of 10%. This year my total income is $38,242 what means that I should get a tax rate of 12% as I checked on the bracket calculator, but Im getting a 15% instead, and I cant see how is that even possible when the brackets jump from 12% to 22%.

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3 Replies
KeshaH
Expert Alumni

Why am I getting a blended tax rate of 15%?

If you have any self employment/independent contractor income, the blended rate you're seeing includes your income tax and self employment tax combined. If you're self employed or an independent contractor, you pay both regular income tax and self employment tax.

Why am I getting a blended tax rate of 15%?

I see your point but I'm not a self employed nor a independent contractor, I only had incomes from to companies that I worked last year.

DawnC
Expert Alumni

Why am I getting a blended tax rate of 15%?

Take a look at this article that explains the marginal and effective tax rates; they are more useful and commonly used in the financial arena.  

 

Blended tax rate = tax liability / taxable income.   TurboTax generates this number and it is not used by anyone else.   The effective and marginal tax rates are the more meaningful rates.

 

More detailed, the Blended Tax rate is:

 

  • Tax liability (Including SE tax, capital gain and special taxes),
  •  Divided by  ÷
  • Taxable income (Total income minus deductions, but before credits).  
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