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 2023:
| Filing Status | Taxable Income ($) | Marginal Tax Bracket Rate (%) |
|---|---|---|
| Married Filing Jointly | 0 to 22,000 | 10 |
| 22,001 to 89,450 | 12 | |
| 89,451 to 190,750 | 22 | |
| 190,751 to 364,200 | 24 | |
| 364,201 to 462,500 | 32 | |
| 462,501 to 693,750 | 35 | |
| 693,750 and higher | 37 | |
| Head of Household | 0 to 15,700 | 10 |
| 15,701 to 59,850 | 12 | |
| 59,851 to 95,350 | 22 | |
| 95,351 to 182,100 | 24 | |
| 182,101 to 231,250 | 32 | |
| 231,251 to 578,100 | 35 | |
| 578,100 and higher | 37 | |
| Single | 0 to 11,000 | 10 |
| 11,001 to 44,725 | 12 | |
| 44,726 to 95,375 | 22 | |
| 95,376 to 182,100 | 24 | |
| 182,101 to 231,250 | 32 | |
| 231,251 to 578,125 | 35 | |
| 578,125 and higher | 37 | |
| Married Filing Separately | 0 to 11,000 | 10 |
| 11,001 to 44,725 | 12 | |
| 44,726 to 95,375 | 22 | |
| 95,376 to 182,100 | 24 | |
| 182,101 to 231,250 | 32 | |
| 231,251 to 346,875 | 35 | |
| 346,875 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%.