# Marginal Tax Rate

Discussion in 'Microsoft Money' started by Doug, Jul 26, 2006.

1. ### DougGuest

On my home page I keep track of my Current Year Estimated Taxes. The window
shows my Marginal Tax rate as 25%. However, my AGI is \$141,000. According
to tax laws the income category of \$123,701 to \$188,450 should be taxed at
28%. Can I force Money to change that or what is happening here? Thansk.

Doug

Doug, Jul 26, 2006

2. ### SamGuest

I could be wrong but I think you might not be understanding marginal
tax rate and how the tax brackets work. Your AGI may be \$141k which
means you fall into the 28% tax bracket but you do not pay 28% tax on
the full \$141k. I am not an expert and I cannot remember the exact
numbers (so these numbers and percentages are just examples) but an
example would be that for the first \$10k amount of your salary you pay
15% tax, then for \$10,001-\$20k you might pay 20% tax and so on until
you reach the end of your salary range. Calculate the sum of the
product of these tax calculations to find out how much tax you actually
owe then take that sum and compare to your agi then you will have your
marginal tax rate which I think would always be lower than your
highest tax bracket.

As I said I am not a tax expert so be sure and double check what I have
said here.

Doug wrote:
> On my home page I keep track of my Current Year Estimated Taxes. The window
> shows my Marginal Tax rate as 25%. However, my AGI is \$141,000. According
> to tax laws the income category of \$123,701 to \$188,450 should be taxed at
> 28%. Can I force Money to change that or what is happening here? Thansk.
>
> Doug

Sam, Jul 26, 2006

3. ### DougGuest

Thansk Sam. I was looking into this a little further and that tax rate may
be based on Taxable Income not AGI. My taxable incoem falls into the 25%
range. I'll do some more checking.

Doug

"Sam" wrote:

> I could be wrong but I think you might not be understanding marginal
> tax rate and how the tax brackets work. Your AGI may be \$141k which
> means you fall into the 28% tax bracket but you do not pay 28% tax on
> the full \$141k. I am not an expert and I cannot remember the exact
> numbers (so these numbers and percentages are just examples) but an
> example would be that for the first \$10k amount of your salary you pay
> 15% tax, then for \$10,001-\$20k you might pay 20% tax and so on until
> you reach the end of your salary range. Calculate the sum of the
> product of these tax calculations to find out how much tax you actually
> owe then take that sum and compare to your agi then you will have your
> marginal tax rate which I think would always be lower than your
> highest tax bracket.
>
> As I said I am not a tax expert so be sure and double check what I have
> said here.
>
> Doug wrote:
> > On my home page I keep track of my Current Year Estimated Taxes. The window
> > shows my Marginal Tax rate as 25%. However, my AGI is \$141,000. According
> > to tax laws the income category of \$123,701 to \$188,450 should be taxed at
> > 28%. Can I force Money to change that or what is happening here? Thansk.
> >
> > Doug

>
>

Doug, Jul 26, 2006
4. ### Cal Learner-- MVPGuest

In microsoft.public.money, Doug wrote:

>On my home page I keep track of my Current Year Estimated Taxes. The window
>shows my Marginal Tax rate as 25%. However, my AGI is \$141,000. According
>to tax laws the income category of \$123,701 to \$188,450 should be taxed at
>28%. Can I force Money to change that or what is happening here? Thansk.

Tools->Settings->TaxSettings
click "Set your filing status and view tax rates by income bracket."

In the Filing Status drop-down list, change your setting if
appropriate.

If you want different values, select Custom.

Cal Learner-- MVP, Jul 26, 2006