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Margin tax rate

Submitted by Guest on December 11, 2007 - 09:29.

Your income is taxed at the margin, or each bracket is calculated separately so only your marginal income above your current rate is calculated at the new rate so you don't lose money per se by going into a new bracket.

There are some deduction rules but it has to do more with what is your TAXABLE income rather than just overall gross. If you have qualifying retirement accounts, 125 plans, etc., and you increase the pre-tax deductions, your TAXABLE income may actually be less than your pre-raise income.

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