How to Know What Tax Table You Are in
Tax tables are often misunderstood in terms of how they work and what they mean. Your tax bracket or marginal tax rate is one of the basics of personal finance that everyone should understand. Knowing this information will help you understand the tax system and make sound financial decisions.
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Instructions
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Understand the Internal Revenue Service's tax tables. Tax tables, or tax brackets as they are also called, let you approximate how much you are taxed on your income. It's important to understand that your income is divided up and taxed at different rates. The part of your income that applies to the first tax bracket is taxed at that rate. The next amount of income is charged according to the next bracket it applies to. The top bracket you're in is known as your marginal tax rate.
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Determine your taxable income. This includes not only your W-2 wages but also any other income you earn, with the exception of long-term capital gains and qualified dividends.
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Do your taxes. Computing your taxes for a given year will let you determine your exact taxable income.
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Look up the current tax table. It can alter slightly every year. The IRS provides current tables on its website (see Resource).
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