What's Your Average Tax Rate?

Click here to see the worksheet below

So you’re annoyed that big bonus knocked you into the 33% tax bracket? Well, if it's any consolation, you don't have to pay the 33% tax rate on allyour income. That's because you're only taxed at the 33% rate on income beyond a certain threshold — $178,650 for a single filer in 2012. Those who are married, filing jointly don't reach the 33% mark until $217,450. Income up to that point is taxed at the lower rates of 10%, 15%, 25% and 28%. So, your average tax rate is actually much lower than the highest rate you pay. Here's how it works.

For example, say, you're single and have taxable income of $185,000 in 2012. And let's say your gross income was $210,000. Well, your income up to $8,700 is taxed at 10%. From $8,701 to $35,350 is taxed at 15%. From $35,351 up to $85,650, it's taxed at 25%. From $85,651 to $178,650, the rate is 28%. And you'll pay 33% on the remaining $6,350. (The top rate, 35%, kicks in at $379,150 for singles.) In this case, your average tax rate (the proportion of gross income you'll pay in taxes) is “only” about 22%.

Plug your own numbers into our calculator to find your own average tax rate and see how it changes at different income levels.

What's Your Tax Rate?

Average Tax Rate Calculator - SmartMoney.com
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