Sentences with phrase «marginal tax bracket because»

Not exact matches

This is because marginal tax rates only apply to income that falls within that specific bracket.

If your deduction drops you down to a lower tax bracket, the calculation is more complicated because you're avoiding taxes on some of the income taxed at your highest marginal rate as well as some of the income that is taxed at the lower rate.

When you finally withdraw the money, you'll have to pay tax, but for most Canadians they'll end up paying less tax because their income in retirement is less than during their working years, putting them in a lower marginal tax bracket.

Doug Hoyes: So, in that example it's not a good investment because I don't know, let's assume I'm in the 50 % marginal tax bracket.

It's an interesting rate because it shows what we actually paid in taxes across all marginal tax brackets and after all credits and deductions.

In this situation, investors in the first four marginal tax brackets would be better off investing in the taxable bond, because even after paying their tax liability, they would still earn more than a 7 % non-taxable bond.

Many questions about «how will this affect my taxes» are simpler if you are in the highest bracket, because nothing you can do will increase your marginal rate.

Note that the effective marginal tax rates (28.1 percent for the worker in the 15 percent income - tax bracket and 37.4 percent for the worker in 25 percent income - tax bracket) are less than the sum of the income tax and payroll tax rates (30.3 percent and 40.3 percent, respectively) because those rates are applied to compensation after the employer's share of payroll taxes has been deducted.

However, this isn't perfectly accurate, because if you are on the edge of a tax bracket then your deduction will actually change your marginal tax rate.

This is because Canada has graduated marginal tax rates, so that as your income rises, you may go into another tax bracket and be paying tax at a higher rate on that additional income.

I don't believe that everybody should just maximize their contribution every year just because they can (unless they have incomes in the top marginal tax bracket).»

In other words, just because someone is in the 25 % tax bracket doesn't necessarily mean he / she is really subject to a 25 % marginal tax rate, as it could be much worse!

The reason your marginal tax rate (tax bracket) is higher than your effective tax rate is because your income is taxed at different rates along the way.