Running some estimates on TT for next year. Solidly in 25% bracket. Why when I put in additional income do taxes increase more then 25%? Why do taxes decrease less then 25% when I put in a deduction (i.e. charity, mortgage interest)? Neither change impacts tax bracket.
cliff wrote:Running some estimates on TT for next year. Solidly in 25% bracket. Why when I put in additional income do taxes increase more then 25%? Why do taxes decrease less then 25% when I put in a deduction (i.e. charity, mortgage interest)? Neither change impacts tax bracket.
Deductions begin to phase out for income above ~167k for married filers.
There are phaseouts for various credits. This is why the concept of "marginal income tax bracket" is fleeting.
You also didn't state where your income comes from. Different kinds of income have different tax rates: wages, qualified dividends, LT cap gains, social security are all taxed differently.
Are you saying some of your income is from social security? If so, your marginal tax rate might not be 25%. See Grabiner's entry in the wiki on taxation of social security benefits.
If your itemized deductions are below the standard deduction ($11400 for most), then increasing deductions has no effect until you get over the $11400 limit, so say your itemized deductions total $9500, you will see no benefit from increasing them until they exceed $11400.