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1999 Marginal Tax Brackets

Your marginal tax bracket determines how much of the earnings from savings and investments you get to keep after taxes. Below are the four individual tax rate schedules for 1999:

Individual Tax Rate Schedules for 1999

	Taxable Income ($)	Effective Rate (%)
Married Filing Jointly	0 to 43,050	15
	43,051 to 104,050	28
	104,051 to 158,550	31
Head of Household	0 to 34,550	15
	34,551 to 89,150	28
	89,151 to 144,440	31
Single	0 to 25,750	15
	25,751 to 62,450	28
	62,451 to 130,250	31
Married Filing Separately	0 to 21,525	15
	21,526 to 52,025	28
	52,026 to 79,275	31

There are also two higher tax brackets, 36% and 39.6%. These are for high-income taxpayers with incomes exceeding the upper limit of the 31% rate. Once you know what marginal tax bracket you are in, you can use this information to make saving and investment decisions. Your goal, of course, is to keep as much as you can, after taxes. The chart below shows the taxable equivalent yields for various rates of return on tax-exempt products (e.g., municipal bonds, tax-exempt money market funds).

Tax-Exempt and Taxable Yields Compared*

Tax-Exempt Yield (%)	Taxable Equivalent Yield (%) for Tax Rate of:
	15% Tax Bracket	28% Tax Bracket	31% Tax Bracket
2.0	2.35	2.77	2.90
3.0	3.53	4.17	4.35
4.0	4.71	5.55	5.80
5.0	5.88	6.94	7.25
6.0	7.06	8.33	8.70
7.0	8.24	9.72	10.14
8.0	9.41	11.11	11.59
*Federal income tax rates only. Does not include state income tax.

If you cannot find a specific rate on the chart, you can compare tax-exempt and taxable yields by using the following formula:

Taxable equivalent yield = tax-free yield divided by (100% - marginal tax bracket %)

EXAMPLE: Assume you are in the 28% tax bracket, and have an investment with a 6.5% tax-free yield. To get the equivalent taxable yield, divide 6.5% by 72% (100% - 28%). The taxable yield is 9.03%.

Once you know how to calculate tax equivalent yields, it's time to go shopping and compare rates of return offered on various investment products. Next, determine which will pay a higher after-tax rate.

Generally speaking, people in the 15% tax bracket earn more after taxes with taxable saving and investment products. Those in higher tax brackets, usually do better with tax-exempts.