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Tax bracket question

Hello, My wife and I recently received a raise at work and changed jobs respectively. This has changed our household income from 98k/yr to approximately 111k/yr. Last year our effective tax rate was near 15% as our adjusted gross income was below 100k. It's my understanding that when our adjusted gross exceeds 100k our tax rate will become 28%. Is that true? If so, what investments can I make to lower my adjusted gross income? My concern is getting a small incremental raise that would result in a 13% immediate increase on my taxes. Can you help? Thanks
Date: Sat-Apr-2-2016-
Response
0
You need to understand how tax brackets work quite obviously

For 2015, you and your spouse pay 10% income taxes on the first $18,450 of taxable income (adjusted gross income - deductions - personal exemptions). After that, you pay a 15% rate on the next $56,000 of taxable income income. Then, the rate increase to 25% on the next $75,000. The rate doesn't go to 28% until you have over $151,000 in taxable income. Remember, tax brackets are based on taxable income, not adjusted gross income, and only the amounts over each threshold get taxed at the higher rate. 

So, it doesn't look like your income tax bracket will change based on the $12,000 increase in wages. 
[d] By: loincloth
Date: Sat-Apr-2-2016
Response
0
The 28% rate will not apply to your entire 
taxable income, only the portion above the bracket cutoff, which varies by filing status. Here are the 2015 brackets: 

https://www.irs.com/articles/2015-federal-tax-rates-personal-exemptions-and-standard-deductions 

If you are married filing jointly the 28% marginal rate kicks in at about $151k. The effective rate is lower than the marginal rate because you're taking an average across all of the brackets your income falls into. The next bracket down is $75-151k with a marginal rate of 25%. You shouldn't see a 13% increase in your tax liability just from the raises. 

The brackets creep up a little each year to adjust for inflation. This is what they should look like this year: 

https://www.irs.com/articles/projected-us-tax-rates-2016 

With an income like yours that is growing you should consider doing some tax planning with a qualified tax pro. 
[d] By: statutes
Date: Sat-Apr-2-2016
Response
What is 1 + 100



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