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2001 Marginal Tax Brackets

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 2001:

Individual Tax Rate Schedules for 2001

	Taxable Income ($)	Effective Rate (%)
Married Filing Jointly	0 to 45,200	15
	45,201 to 109,250	27.5
	109,251 to 166,450	30.5
	166,451 to 297,300	35.5
	More than 297,300	39.1
Head of Household	0 to 36,250	15
	36,251 to 93,600	27.5
	93,601 to 151,600	30.5
	151,601 to 297,300	35.5
	More than 297,300	39.1
Single	0 to 27,050	15
	27,051 to 65,550	27.5
	65,551 to 136,750	30.5
	136,751 to 297,300	35.5
	More than 297,300	39.1
Married Filing Separately	0 to 22,600	15
	22,601 to 54,625	27.5
	54,626 to 83,225	30.5
	83,226 to 148,650	35.5
	More than 148,650	39.1
NOTE: Since 1/1/93, higher 36% and 39.6% marginal tax brackets are also in effect for upper income taxpayers with incomes exceeding the upper limit of the 31% rate.

Tax-Exempt and Taxable Yields Compared*

Tax-Exempt Yield (%)	Taxable Equivalent Yield (%) for Tax Rate of:
	15% Tax Bracket	28% Tax Bracket	31% Tax Bracket
2.0	2.35	2.77	2.90
2.5	2.94	3.47	3.62
3.0	3.53	4.17	4.35
3.5	4.18	4.86	5.07
4.0	4.71	5.55	5.80
4.5	5.29	6.25	6.52
5.0	5.88	6.94	7.25
5.5	6.47	7.64	7.97
6.0	7.06	8.33	8.70
6.5	7.65	9.03	9.42
7.0	8.24	9.72	10.14
7.5	8.82	10.42	10.87
8.0	9.41	11.11	11.59
*Federal income tax rates only. Does not include state income tax.

If you cannot find a specific rate on the chart, you can compare tax-exempt and taxable yields by using the following formula:

Taxable equivalent yield = tax-free yield divided by (100% - marginal tax bracket %)

EXAMPLE: Assume you are in the 28% tax bracket, and have an investment with a 6.5% tax-free yield. To get the equivalent taxable yield, divide 6.5% by 72% (100% - 28%). The taxable yield is 9.03%.

Once you know how to calculate tax equivalent yields, it's time to go shopping and compare rates of return offered on various investment products. Next, determine which will pay a higher after-tax rate.

Generally speaking, people in the 15% tax bracket earn more after taxes with taxable saving and investment products. Those in higher tax brackets, usually do better with tax-exempts.