# Tax bracket Question

R

#### Robert11

Hello:

Not too sharp with this, so please bear with me on a pretty basic question/

If your Taxable Income puts you in a certain tax bracket, is the whole
amount taxed at the rate for that bracket,
or just the amount that's over the next lower bracket ?

In other words, is the taxable amount taxed at different rates, or just the
total amount at the rate that applicable for that amount's bracket ?

Thanks,
Bob

D

#### Don Priebe

If your Taxable Income puts you in a certain tax bracket, is the whole
amount taxed at the rate for that bracket,
or just the amount that's over the next lower bracket ?
In olden days, the simple answer was that it's just the amount that's over
the next lower bracket, or for the mathematically inclined it's your
incremental tax rate. A graph of tax vs taxable income was piece-wise
linear; "tax bracket" was the slope at your taxable income.

Of course now it's more complicated than that. Your "tax bracket" is
different for long term capital gains and qualified dividends than it is for
ordinary income. Also some of your deductions and even personal exemptions
are phased out as your income increases. Tax exempt income may be tax
exempt, but it causes other income (such as social security) to be taxed.
But people still insist in using the term.

E

#### Ernie Klein

Robert11 said:
Hello:

Not too sharp with this, so please bear with me on a pretty basic question/

If your Taxable Income puts you in a certain tax bracket, is the whole
amount taxed at the rate for that bracket, NO
or just the amount that's over the next lower bracket ?
YES
In other words, is the taxable amount taxed at different rates, or just the
total amount at the rate that applicable for that amount's bracket ?

2006 for Single Filing Status
(Tax Rate Schedule X)
€ 10% on income between \$0 and \$7,550
€ 15% on the income between \$7,550 and \$30,650; plus \$755.00
€ 25% on the income between \$30,650 and \$74,200; plus \$4,220.00
€ 28% on the income between \$74,200 and \$154,800; plus \$15,107.50
€ 33% on the income between \$154,800 and \$336,550; plus \$37,675.50
€ 35% on the income over \$336,550; plus \$97,653.00