Your marginal tax bracket determines how much of the earnings from savings and investments you get to keep after taxes. Below are the tax rate schedules for 2015:
| Marginal Tax Bracket Rate | Single Taxable Income |
Married Filing Jointly Taxable Income |
Married Filing Separately Taxable Income |
Head of Household Taxable Income |
|---|---|---|---|---|
| 10% | $0 to $9,225 | $0 to $18,450 | $0 to $9,225 | $0 to $13,150 |
| 15% | $9,226 to $37,450 | $18,451 to $74,900 | $9,226 to $37,450 | $13,151 to $50,200 |
| 25% | $37,451 to $90,750 | $74,901 to $151,200 | $37,451 to $75,600 | $50,201 to $129,600 |
| 28% | $90,751 to $189,300 | $151,201 to $230,450 | $75,601 to $115,225 | $129,601 to $290,850 |
| 33% | $189,301 to $411,500 | $230,451 to $411,500 | $115,226 to $205,750 | $209,851 to $411,500 |
| 35% | $411,501 to $413,200 | $411,501 to $464,850 | $205,751 to $232,425 | $411,501 to $439,000 |
| 39.6% | $413,201 and higher | $464,851 and higher | $232,426 and higher | $493,001 and higher |
You can compare yields by using the following formula:
Taxable equivalent yield = tax-free yield ÷ (100% – marginal tax bracket %) or see www.calcxml.com/calculators/inc11?skn, which includes both federal and state income tax rates.
Example: Assume you are in the 25% tax bracket, and have an account with a 4.0% tax-free yield. To get the equivalent taxable yield, divide 4.0% by 75% (100% – 25%). The taxable yield is 5.33%.