Is my income tax bracket based on gross income or AGI? What other factors can affect what my income tax bracket can be if I'm teetering close to two brackets?
Neither. A Look at Form 1040 will show you the math by which taxable income is calculated. 22 lines to get to your total income. 37 to your adjusted gross, 61 to your taxable income. (Note, there are tax credits that may appear in the remaining lines, which can wipe out any or all of the tax bill of line 61. You can be in the 10% bracket, but have Uncle Sam pick up the remaining tab.) For most people in the US, personal exemptions and the standard deduction are the two largest reductions to one's income. For the next group, it's the Schedule A that will tally enough deductions to exceed the standard deduction and the taxpayer benefits from "itemizing." The recent Question Could a 401k or IRA contribution switch my current taxable income to a lower tax bracket? is this the same for traditional and Roth 401k? should answer how you know your bracket once you arrive at your taxable income.