Married couple both employed with two dependents. What income amount puts us in a new tax bracket?

Question

Last year around 40,000. This year around 60,000.

Answer 1

Your deductions are $24,300. Your taxable income is $35,700.
Out of this $15,650 is taxed at 10%.
Then taxable income from $15,650 to $63,700 is taxed at 15%.
So even if your income becomes $88,000, your top tax bracket is 15%. Only the income over $88,000 will be taxed at 25%.

Answer 2

On a joint return, with four exemptions for the two of you and two dependents, and a standard deduction, you'll be in the 15% bracket with $60K income. That bracket starts at $15,100 TAXABLE income, which is after subtracting your standard deduction and exemptions. With 40K income last year you'd have also been in the same bracket.

But quit worrying about going into a new tax bracket. OK, the dividing line between 15% and 25% brackets on a joint return is $61,300. Say your taxable income was 61.301, so you were now "in the 25% bracket." You'd pay the exact same amount of tax on the first 61,300 of taxable income, and would only pay the new bracket % of 25% on the dollar that was over the limit. Brackets are something most people don't understand, and they think if they go into another bracket their % goes way up - it doesn't.

Answer 3

Look at IRS publication 1040es.

The 25% tax bracket beings when your taxable income exceeds $63,700.