12/17/2010 – with the passage of the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010, the rate changes formerly discussed in this article have been superseded.
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I can learn from you, you can learn from me - please leave your comments and links!Jim Blankenship, CFP®, EA, is an expert in personal retirement, IRAs, and tax issues, with more than 25 years of experience in the industry. Read more from this author
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[...] The effective rate on the household’s gross income of $85,000 will go from 9.2% to 10.2%. For the same family in our example but with a household gross income of $120,000, under the new schedule and bracket the tax would be $17,462, versus $15,875 using the real 2009 schedules, changing the effective rate for the family from 13.2% to 14.6%. The effect becomes less pronounced as incomes rise, due to the fact that the marriage penalty is in full effect for the higher brackets. And this doesn’t take into account the revision to the tax brackets that will go into effect as of 2011 as well – read more on that change by clicking here. [...]
[...] a lot of money! But then again, half in 2011 and half in 2012 – didn’t someone mention that tax rates are going to increase? It sure would be nice to be able to split this up over all three [...]
Very informative and clear.
As a budding financial planner, I like Jim’s style.
Imitation is the sincerest form of flattery. Thank you sir.
Seasons greetings.
Ravi
Thank you for the kind words, Ravi.
jb