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2006 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 2006:

Individual Tax Rate Schedules for 2006
Filing Status Taxable Income ($) Marginal Tax Bracket Rate (%)
Married Filing Jointly 0 to 15,100 10
15,101 to 61,300 15
61,301 to 123,700 25
123,701 to 188,450 28
188,451 to 336,550 33
336,551 and higher 35
Head of Household 0 to 10,750 10
10,751 to 41,050 15
41,051 to 106,000 25
106,001 to 171,650 28
171,651 to 336,550 33
336,551 and higher 35
Single 0 to 7,550 10
7,551 to 30,650 15
30,651 to 74,200 25
74,201 to 154,800 28
154,801 to 336,550 33
336,551 and higher 35
Married Filing Separately 0 to 7,550 10
7,551 to 30,650 15
30,651 to 61,850 25
61,851 to 94,225 28
94,226 to 168,275 33
168,276 and higher 35

Tax-Exempt and Taxable Yields Compared*
Tax-Exempt Yield (%) Taxable Equivalent Yield (%) for Tax Rate of:
15% Tax Bracket 25% Tax Bracket 28% Tax Bracket 33% Tax Bracket 35% Tax Bracket
2.0 2.35 2.66 2.77 2.98 3.08
2.5 2.94 3.33 3.47 3.73 3.85
3.0 3.53 4.00 4.17 4.48 4.62
3.5 4.18 4.66 4.86 5.22 5.38
4.0 4.71 5.33 5.55 5.97 6.15
4.5 5.29 6.00 6.25 6.71 6.92
5.0 5.88 6.66 6.94 7.46 7.69
5.5 6.47 7.33 7.63 8.20 8.46
6.0 7.06 8.00 8.33 8.95 9.23
6.5 7.65 8.66 9.02 9.70 10.00
7.0 8.24 9.33 9.72 10.44 10.77
*Federal income tax rates only. Does not include state income tax.

If you cannot find a specific rate on the chart you can compare yields by using the following formula:

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

Example: Assume you are in the 25% tax bracket, and have an account with a 4.5% tax-free yield. To get the equivalent taxable yield, divide 4.5% by 75% (100% - 25%). The taxable yield is 6.%.