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 2020:
| Filing Status | Taxable Income ($) | Marginal Tax Bracket Rate (%) |
|---|---|---|
| Married Filing Jointly | 0 to 19,750 | 10 |
| 19,751 to 80,250 | 12 | |
| 80,251 to 171,050 | 22 | |
| 171,051 to 326,600 | 24 | |
| 326,601 to 414,700 | 32 | |
| 414,701 to 622,050 | 35 | |
| 622,051 and higher | 37 | |
| Head of Household | 0 to 14,100 | 10 |
| 14,101 to 53,700 | 12 | |
| 53,701 to 85,500 | 22 | |
| 85,501 to 163,300 | 24 | |
| 163,301 to 207,350 | 32 | |
| 207,351 to 518,400 | 35 | |
| 518,401 and higher | 37 | |
| Single | 0 to 9,875 | 10 |
| 9,876 to 40,125 | 12 | |
| 40,126 to 85,525 | 22 | |
| 85,526 to 163,300 | 24 | |
| 163,301 to 207,350 | 32 | |
| 207,351 to 518,400 | 35 | |
| 518,401 and higher | 37 | |
| Married Filing Separately | 0 to 9,875 | 10 |
| 9,876 to 40,125 | 12 | |
| 40,126 to 85,525 | 22 | |
| 85,526 to 163,300 | 24 | |
| 163,301 to 207,350 | 32 | |
| 207,351 to 311,025 | 35 | |
| 311,026 and higher | 37 |
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 22% tax bracket, and have an account with a 4.0% tax-free yield. To get the equivalent taxable yield, divide 4.0% by 78% (100% - 22%). The taxable yield is 5.13%.