Calculators: Tax Guide

What's Your Average Tax Rate?
By SmartMoney.com Staff
Updated on January 10, 2008

SO YOU'RE ANGRY that big bonus knocked you into the 33% tax bracket? Well, if it's any consolation, you don't have to pay the 33% tax rate on all your income. That's because you're only taxed at the 33% rate on income beyond a certain threshold -- $164,550 for a single filer in 2008. Those who are married, filing jointly don't reach the 33% mark until $200,300. Income up to that point is taxed at the lower rates of 10%, 15%, 25% and 28%. So, your average tax rate is actually much lower than the highest rate you pay. Here's how it works.

• Click here to see the calculator below.

Say, you're single and have taxable income of $175,000 in 2008. And let's say your gross income was $200,000. Well, your income up to $8,025 is taxed at 10%. From $8,026 to $32,550 is taxed at 15%. From $32,551 up to $78,850, it's taxed at 25%. From $78,851 to $164,550, the rate is 28%. And you'll pay 33% on the remaining $10,450. (The top rate, 35%, kicks in at $357,701 for singles.) In this case, your average tax rate (the proportion of gross income you'll pay in taxes) is about 21.8%.

Plug your own numbers into our calculator to find your own average tax rate and see how it changes at different income levels.