But if you're in one of
the top federal income tax brackets and live in a state with high income taxes, you may come out ahead with a tax - free fund.
A six per cent increase to
the top federal income tax bracket, for example, might bring in $ 1 or $ 2 billion per year — not nearly enough to compensate millions of middle - earners with stagnating wages.
Not exact matches
Admittedly, it takes a rather mundane $ 135,055 of individual annual
income to make it into the
top federal tax bracket in Canada, as opposed to more than US$ 400,000 in the U.S. Taxpayers who fall below that U.S. threshold are, generally speaking, better off south of the border.
Compounding the problem, President Trump and congressional Republicans aim to eliminate or curtail state and local
tax deductions to help pay for
federal income -
tax rate cuts in
top brackets.
If you combine the
top Federal tax bracket (39.6 %) with the
top California
tax bracket (13.3 %) and the Medicare surcharge of.9 % on
incomes over $ 250,000, you have a
top tax rate of 51.9 %.
You might be in the 25 % marginal
tax bracket for
federal income taxes, but on
top of this you might add, say 7 % for state
income taxes, 7.65 % for FICA, and say, 2 % for municipal
income taxes, for a total marginal
tax rate of 41.65 %.
The Revenue Reconciliation Act of 1993 eliminated some of the changes in the 1986
tax act and added two new
federal income tax brackets to the existing three, with the
top rate hitting 39.6 %.
To illustrate, let's take a look at three employees, Angelica, Eliza and Peggy, whose employment
income falls into the lowest, middle and
top federal tax brackets and see what their take home pay looks like for their first payroll of 2016 versus what it would have looked like a year ago.
For instance, if you expect to be in the 22 %
federal tax bracket once you start required minimum distributions in your 70s, you might aim to generate enough
income in your 60s to get to the
top of the 12 %
bracket.
Speaking to investment
income, a NJ taxpayer in the
top tax bracket in all categories pays 39.6 % in Federal tax, 8.97 % in direct NJ State Tax and Obamacare 3.8 % tax on investment income (muni bonds are exemp
tax bracket in all categories pays 39.6 % in
Federal tax, 8.97 % in direct NJ State Tax and Obamacare 3.8 % tax on investment income (muni bonds are exemp
tax, 8.97 % in direct NJ State
Tax and Obamacare 3.8 % tax on investment income (muni bonds are exemp
Tax and Obamacare 3.8 %
tax on investment income (muni bonds are exemp
tax on investment
income (muni bonds are exempt).
Depending on your
federal tax bracket, ordinary
income tax rates can be as high as 37 percent whereas capital gains
tax rates
top out at 20 percent.