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 2020:
| 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 $9,875 | $0 to $19,750 | $0 to $9,875 | $0 to $14,100 |
| 12% | $9,876 to $40,125 | $19,751 to $80,250 | $9,876 to $40,125 | $14,101 to $53,700 |
| 22% | $40,126 to $85,525 | $80,251 to $171,050 | $40,126 to $85,525 | $53,701 to $85,500 |
| 24% | $85,526 to $163,300 | $171,051 to $326,600 | $85,526 to $163,300 | $85,501 to $163,300 |
| 32% | $163,301 to $207,350 | $326,601 to $414,700 | $163,301 to $207,350 | $163,301 to $207,350 |
| 35% | $207,351 to $518,400 | $414,701 to $622,050 | $207,351 to $311,025 | $207,351 to $518,400 |
| 37% | $518,401 and higher | $622,051 and higher | $311,026 and higher | $518,401 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 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%.